Correlation Between Planet Image and NETGEAR

Can any of the company-specific risk be diversified away by investing in both Planet Image and NETGEAR 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 Planet Image and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Planet Image International and NETGEAR, you can compare the effects of market volatilities on Planet Image and NETGEAR 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 Planet Image with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Image and NETGEAR.

Diversification Opportunities for Planet Image and NETGEAR

0.73

Correlation Coefficient

Planet Image  NETGEAR

Poor diversification

The 3 months correlation between Planet and NETGEAR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Planet Image International and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Planet Image 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 Planet Image International are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Planet Image i.e., Planet Image and NETGEAR go up and down completely randomly.

Pair Corralation between Planet Image and NETGEAR

Given the investment horizon of 90 days Planet Image International is expected to under-perform the NETGEAR. In addition to that, Planet Image is 1.26 times more volatile than NETGEAR. It trades about -0.24 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.03 per unit of volatility. If you would invest  2,750  in NETGEAR on February 2, 2025 and sell it today you would earn a total of  50.00  from holding NETGEAR or generate 1.82% return on investment over 90 days.

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

Planet Image International  vs.  NETGEAR

Planet Image Interna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Image International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NETGEAR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Planet Image and NETGEAR

The main advantage of trading using opposite Planet Image and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Image position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.

The idea behind Planet Image International and NETGEAR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.