Correlation Between NetScout Systems and Arbe Robotics

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

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

Diversification Opportunities for NetScout Systems and Arbe Robotics

-0.09

Correlation Coefficient

NetScout Systems  Arbe Robotics

Good diversification

The 3 months correlation between NetScout and Arbe is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and NetScout Systems 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 NetScout Systems are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of NetScout Systems i.e., NetScout Systems and Arbe Robotics go up and down completely randomly.

Pair Corralation between NetScout Systems and Arbe Robotics

Given the investment horizon of 90 days NetScout Systems is expected to generate 11.71 times less return on investment than Arbe Robotics. But when comparing it to its historical volatility, NetScout Systems is 5.24 times less risky than Arbe Robotics. It trades about 0.04 of its potential returns per unit of risk. Arbe Robotics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Arbe Robotics on October 20, 2024 and sell it today you would earn a total of  77.00  from holding Arbe Robotics or generate 38.69% return on investment over 90 days.

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

NetScout Systems  vs.  Arbe Robotics

NetScout Systems

Risk-Adjusted Performance

3 of 100

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 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.

Arbe Robotics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbe Robotics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Arbe Robotics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetScout Systems and Arbe Robotics

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

The idea behind NetScout Systems and Arbe Robotics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.