Correlation Between International Money and NetScout Systems

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

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

Diversification Opportunities for International Money and NetScout Systems

-0.76

Correlation Coefficient

International Money  NetScout Systems

Pay attention - limited upside

The 3 months correlation between International and NetScout is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding International Money Express and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and International Money 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 International Money Express 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 International Money i.e., International Money and NetScout Systems go up and down completely randomly.

Pair Corralation between International Money and NetScout Systems

Given the investment horizon of 90 days International Money Express is expected to under-perform the NetScout Systems. But the stock apears to be less risky and, when comparing its historical volatility, International Money Express is 1.58 times less risky than NetScout Systems. The stock trades about -0.15 of its potential returns per unit of risk. The NetScout Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,202  in NetScout Systems on November 27, 2024 and sell it today you would earn a total of  119.00  from holding NetScout Systems or generate 5.4% return on investment over 90 days.

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

International Money Express  vs.  NetScout Systems

International Money

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Money Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NetScout Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 3 (%) 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 International Money and NetScout Systems

The main advantage of trading using opposite International Money and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Money 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 International Money Express 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.