Correlation Between NETGEAR and Nextplat Corp

Can any of the company-specific risk be diversified away by investing in both NETGEAR and Nextplat Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NETGEAR and Nextplat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NETGEAR and Nextplat Corp, you can compare the effects of market volatilities on NETGEAR and Nextplat Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NETGEAR with a short position of Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Nextplat Corp.

Diversification Opportunities for NETGEAR and Nextplat Corp

0.55

Correlation Coefficient

NETGEAR  Nextplat Corp

Very weak diversification

The 3 months correlation between NETGEAR and Nextplat is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp and NETGEAR is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NETGEAR are associated (or correlated) with Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of NETGEAR i.e., NETGEAR and Nextplat Corp go up and down completely randomly.

Pair Corralation between NETGEAR and Nextplat Corp

Given the investment horizon of 90 days NETGEAR is expected to generate 2.99 times less return on investment than Nextplat Corp. But when comparing it to its historical volatility, NETGEAR is 1.4 times less risky than Nextplat Corp. It trades about 0.1 of its potential returns per unit of risk. Nextplat Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Nextplat Corp on April 23, 2025 and sell it today you would earn a total of  35.73  from holding Nextplat Corp or generate 70.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NETGEAR  vs.  Nextplat Corp

NETGEAR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Nextplat Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nextplat Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Nextplat Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Nextplat Corp

The main advantage of trading using opposite NETGEAR and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Nextplat Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.

The idea behind NETGEAR and Nextplat Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.