Correlation Between NetScout Systems and A10 Network

Can any of the company-specific risk be diversified away by investing in both NetScout Systems and A10 Network 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 A10 Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NetScout Systems and A10 Network, you can compare the effects of market volatilities on NetScout Systems and A10 Network 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 A10 Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetScout Systems and A10 Network.

Diversification Opportunities for NetScout Systems and A10 Network

0.49

Correlation Coefficient

NetScout Systems  A10 Network

Very weak diversification

The 3 months correlation between NetScout and A10 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and A10 Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A10 Network 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 A10 Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A10 Network has no effect on the direction of NetScout Systems i.e., NetScout Systems and A10 Network go up and down completely randomly.

Pair Corralation between NetScout Systems and A10 Network

Given the investment horizon of 90 days NetScout Systems is expected to generate 0.85 times more return on investment than A10 Network. However, NetScout Systems is 1.18 times less risky than A10 Network. It trades about 0.16 of its potential returns per unit of risk. A10 Network is currently generating about 0.09 per unit of risk. If you would invest  2,193  in NetScout Systems on October 25, 2024 and sell it today you would earn a total of  68.00  from holding NetScout Systems or generate 3.1% return on investment over 90 days.

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

NetScout Systems  vs.  A10 Network

NetScout Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 7 (%) 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 February 2025.

A10 Network

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A10 Network are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, A10 Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetScout Systems and A10 Network

The main advantage of trading using opposite NetScout Systems and A10 Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetScout Systems position performs unexpectedly, A10 Network 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 A10 Network will offset losses from the drop in A10 Network's long position.

The idea behind NetScout Systems and A10 Network 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.