Correlation Between Castle Biosciences and NETGEAR

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Can any of the company-specific risk be diversified away by investing in both Castle Biosciences 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 Castle Biosciences and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castle Biosciences and NETGEAR, you can compare the effects of market volatilities on Castle Biosciences 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 Castle Biosciences with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Biosciences and NETGEAR.

Diversification Opportunities for Castle Biosciences and NETGEAR

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Castle and NETGEAR is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Castle Biosciences 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 Castle Biosciences 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 Castle Biosciences i.e., Castle Biosciences and NETGEAR go up and down completely randomly.

Pair Corralation between Castle Biosciences and NETGEAR

Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 1.11 times less risky than NETGEAR. The stock trades about -0.11 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,432  in NETGEAR on April 26, 2025 and sell it today you would earn a total of  146.00  from holding NETGEAR or generate 6.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Castle Biosciences  vs.  NETGEAR

 Performance 
       Timeline  
Castle Biosciences 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Castle Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
NETGEAR 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Castle Biosciences and NETGEAR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Castle Biosciences and NETGEAR

The main advantage of trading using opposite Castle Biosciences and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Biosciences 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 Castle Biosciences 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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