Correlation Between Marqeta and NetScout Systems

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

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

Diversification Opportunities for Marqeta and NetScout Systems

-0.65

Correlation Coefficient

Marqeta  NetScout Systems

Excellent diversification

The 3 months correlation between Marqeta and NetScout is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marqeta and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Marqeta 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 Marqeta 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 Marqeta i.e., Marqeta and NetScout Systems go up and down completely randomly.

Pair Corralation between Marqeta and NetScout Systems

Allowing for the 90-day total investment horizon Marqeta is expected to under-perform the NetScout Systems. In addition to that, Marqeta is 1.29 times more volatile than NetScout Systems. It trades about -0.15 of its total potential returns per unit of risk. NetScout Systems is currently generating about 0.01 per unit of volatility. If you would invest  2,194  in NetScout Systems on September 25, 2024 and sell it today you would lose (1.00) from holding NetScout Systems or give up 0.05% of portfolio value over 90 days.

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

Marqeta  vs.  NetScout Systems

Marqeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marqeta has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

NetScout Systems

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Marqeta and NetScout Systems

The main advantage of trading using opposite Marqeta and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marqeta 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 Marqeta 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.