Correlation Between Cellebrite and NetScout Systems

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

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

Diversification Opportunities for Cellebrite and NetScout Systems

0.38

Correlation Coefficient

Cellebrite  NetScout Systems

Weak diversification

The 3 months correlation between Cellebrite and NetScout is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cellebrite DI and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Cellebrite 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 Cellebrite DI are associated (or correlated) with NetScout Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetScout Systems has no effect on the direction of Cellebrite i.e., Cellebrite and NetScout Systems go up and down completely randomly.

Pair Corralation between Cellebrite and NetScout Systems

Given the investment horizon of 90 days Cellebrite DI is expected to under-perform the NetScout Systems. In addition to that, Cellebrite is 1.2 times more volatile than NetScout Systems. It trades about -0.26 of its total potential returns per unit of risk. NetScout Systems is currently generating about 0.08 per unit of volatility. If you would invest  2,217  in NetScout Systems on November 28, 2024 and sell it today you would earn a total of  103.00  from holding NetScout Systems or generate 4.65% return on investment over 90 days.

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

Cellebrite DI  vs.  NetScout Systems

Cellebrite DI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cellebrite DI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NetScout Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, NetScout Systems may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Cellebrite and NetScout Systems

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

The idea behind Cellebrite DI and NetScout Systems 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.