Correlation Between LG Display and NETGEAR
Can any of the company-specific risk be diversified away by investing in both LG Display 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 LG Display and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and NETGEAR, you can compare the effects of market volatilities on LG Display 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 LG Display with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and NETGEAR.
Diversification Opportunities for LG Display and NETGEAR
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LPL and NETGEAR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and LG Display 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 LG Display Co 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 LG Display i.e., LG Display and NETGEAR go up and down completely randomly.
Pair Corralation between LG Display and NETGEAR
Considering the 90-day investment horizon LG Display is expected to generate 1.23 times less return on investment than NETGEAR. But when comparing it to its historical volatility, LG Display Co is 1.58 times less risky than NETGEAR. It trades about 0.16 of its potential returns per unit of risk. NETGEAR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,196 in NETGEAR on April 22, 2025 and sell it today you would earn a total of 562.00 from holding NETGEAR or generate 25.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. NETGEAR
Performance |
| Timeline |
| LG Display |
| NETGEAR |
LG Display and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and NETGEAR
The main advantage of trading using opposite LG Display and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.| LG Display vs. Universal Electronics | LG Display vs. Xiaomi Corp ADR | LG Display vs. Viomi Technology ADR | LG Display vs. Yatsen Holding |
| NETGEAR vs. Knowles Cor | NETGEAR vs. Extreme Networks | NETGEAR vs. KVH Industries | NETGEAR vs. Comtech Telecommunications Corp |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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