Correlation Between NetScout Systems and Payfare

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

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

Diversification Opportunities for NetScout Systems and Payfare

0.32

Correlation Coefficient

NetScout Systems  Payfare

Weak diversification

The 3 months correlation between NetScout and Payfare is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare 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 Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of NetScout Systems i.e., NetScout Systems and Payfare go up and down completely randomly.

Pair Corralation between NetScout Systems and Payfare

Given the investment horizon of 90 days NetScout Systems is expected to generate 55.06 times less return on investment than Payfare. In addition to that, NetScout Systems is 2.38 times more volatile than Payfare. It trades about 0.0 of its total potential returns per unit of risk. Payfare is currently generating about 0.09 per unit of volatility. If you would invest  266.00  in Payfare on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Payfare or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.97%
Values	Daily Returns

NetScout Systems  vs.  Payfare

NetScout Systems

Risk-Adjusted Performance

Very 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.

Payfare

Risk-Adjusted Performance

OK

Over the last 90 days Payfare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Payfare is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NetScout Systems and Payfare

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

The idea behind NetScout Systems and Payfare 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .