Correlation Between NetScout Systems and Euronet Worldwide

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

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

Diversification Opportunities for NetScout Systems and Euronet Worldwide

-0.21

Correlation Coefficient

NetScout Systems  Euronet Worldwide

Very good diversification

The 3 months correlation between NetScout and Euronet is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Euronet Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronet Worldwide 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 Euronet Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronet Worldwide has no effect on the direction of NetScout Systems i.e., NetScout Systems and Euronet Worldwide go up and down completely randomly.

Pair Corralation between NetScout Systems and Euronet Worldwide

Given the investment horizon of 90 days NetScout Systems is expected to generate 58.94 times less return on investment than Euronet Worldwide. In addition to that, NetScout Systems is 1.03 times more volatile than Euronet Worldwide. It trades about 0.0 of its total potential returns per unit of risk. Euronet Worldwide is currently generating about 0.04 per unit of volatility. If you would invest  10,257  in Euronet Worldwide on December 29, 2024 and sell it today you would earn a total of  456.00  from holding Euronet Worldwide or generate 4.45% 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.  Euronet Worldwide

NetScout Systems

Risk-Adjusted Performance

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.

Euronet Worldwide

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NetScout Systems and Euronet Worldwide

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

The idea behind NetScout Systems and Euronet Worldwide 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.