Correlation Between ForgeRock and NetScout Systems

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

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

Diversification Opportunities for ForgeRock and NetScout Systems

0.28

Correlation Coefficient

ForgeRock  NetScout Systems

Modest diversification

The 3 months correlation between ForgeRock and NetScout is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ForgeRock and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and ForgeRock 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 ForgeRock are associated (or correlated) with NetScout Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetScout Systems has no effect on the direction of ForgeRock i.e., ForgeRock and NetScout Systems go up and down completely randomly.

Pair Corralation between ForgeRock and NetScout Systems

If you would invest  2,071  in NetScout Systems on September 1, 2024 and sell it today you would earn a total of  117.00  from holding NetScout Systems or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

ForgeRock  vs.  NetScout Systems

ForgeRock

Risk-Adjusted Performance

0 of 100

Very Weak

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

NetScout Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 4 (%) 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 December 2024.

Pair Trading with ForgeRock and NetScout Systems

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

The idea behind ForgeRock and NetScout Systems 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.