Correlation Between Nathans Famous and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Nathans Famous 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 Nathans Famous and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nathans Famous and NETGEAR, you can compare the effects of market volatilities on Nathans Famous 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 Nathans Famous with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nathans Famous and NETGEAR.
Diversification Opportunities for Nathans Famous and NETGEAR
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nathans and NETGEAR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nathans Famous and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Nathans Famous 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 Nathans Famous 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 Nathans Famous i.e., Nathans Famous and NETGEAR go up and down completely randomly.
Pair Corralation between Nathans Famous and NETGEAR
Given the investment horizon of 90 days Nathans Famous is expected to under-perform the NETGEAR. In addition to that, Nathans Famous is 1.41 times more volatile than NETGEAR. It trades about -0.28 of its total potential returns per unit of risk. NETGEAR is currently generating about -0.21 per unit of volatility. If you would invest 2,849 in NETGEAR on April 25, 2025 and sell it today you would lose (245.00) from holding NETGEAR or give up 8.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nathans Famous vs. NETGEAR
Performance |
| Timeline |
| Nathans Famous |
| NETGEAR |
Nathans Famous and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nathans Famous and NETGEAR
The main advantage of trading using opposite Nathans Famous and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nathans Famous 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.| Nathans Famous vs. Rave Restaurant Group | Nathans Famous vs. Ark Restaurants Corp | Nathans Famous vs. One Group Hospitality | Nathans Famous vs. Flanigans Enterprises |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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