Correlation Between Network 1 and Standard

Can any of the company-specific risk be diversified away by investing in both Network 1 and Standard 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 Network 1 and Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network 1 Technologies and Standard Motor Products, you can compare the effects of market volatilities on Network 1 and Standard 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 Network 1 with a short position of Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network 1 and Standard.

Diversification Opportunities for Network 1 and Standard

0.68

Correlation Coefficient

Network 1  Standard

Poor diversification

The 3 months correlation between Network and Standard is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Network 1 Technologies and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products and Network 1 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 Network 1 Technologies are associated (or correlated) with Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Network 1 i.e., Network 1 and Standard go up and down completely randomly.

Pair Corralation between Network 1 and Standard

Given the investment horizon of 90 days Network 1 Technologies is expected to generate 1.78 times more return on investment than Standard. However, Network 1 is 1.78 times more volatile than Standard Motor Products. It trades about 0.09 of its potential returns per unit of risk. Standard Motor Products is currently generating about 0.13 per unit of risk. If you would invest  128.00  in Network 1 Technologies on July 15, 2025 and sell it today you would earn a total of  28.00  from holding Network 1 Technologies or generate 21.88% return on investment over 90 days.

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

Network 1 Technologies  vs.  Standard Motor Products

Network 1 Technologies

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Network 1 Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Network 1 reported solid returns over the last few months and may actually be approaching a breakup point.

Standard Motor Products

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Motor Products are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Standard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Network 1 and Standard

The main advantage of trading using opposite Network 1 and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network 1 position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.

The idea behind Network 1 Technologies and Standard Motor Products 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.