Correlation Between NetScout Systems and BOS Better

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

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

Diversification Opportunities for NetScout Systems and BOS Better

0.55

Correlation Coefficient

NetScout Systems  BOS Better

Very weak diversification

The 3 months correlation between NetScout and BOS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of NetScout Systems i.e., NetScout Systems and BOS Better go up and down completely randomly.

Pair Corralation between NetScout Systems and BOS Better

Given the investment horizon of 90 days NetScout Systems is expected to under-perform the BOS Better. But the stock apears to be less risky and, when comparing its historical volatility, NetScout Systems is 1.92 times less risky than BOS Better. The stock trades about -0.07 of its potential returns per unit of risk. The BOS Better Online is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  342.00  in BOS Better Online on October 7, 2024 and sell it today you would earn a total of  29.00  from holding BOS Better Online or generate 8.48% 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.  BOS Better Online

NetScout Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 5 (%) 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.

BOS Better Online

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetScout Systems and BOS Better

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

The idea behind NetScout Systems and BOS Better Online 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.