Correlation Between FLT Old and NetScout Systems

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

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

Diversification Opportunities for FLT Old and NetScout Systems

0.0

Correlation Coefficient

FLT Old  NetScout Systems

Pay attention - limited upside

The 3 months correlation between FLT and NetScout is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FLT Old and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and FLT Old 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 FLT Old 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 FLT Old i.e., FLT Old and NetScout Systems go up and down completely randomly.

Pair Corralation between FLT Old and NetScout Systems

If you would invest  2,150  in NetScout Systems on December 30, 2024 and sell it today you would lose (29.00) from holding NetScout Systems or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FLT Old  vs.  NetScout Systems

FLT Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days FLT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, FLT Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

NetScout Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetScout Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NetScout Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FLT Old and NetScout Systems

The main advantage of trading using opposite FLT Old and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLT Old 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 FLT Old 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.