Correlation Between NetScout Systems and Remitly Global

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

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

Diversification Opportunities for NetScout Systems and Remitly Global

0.67

Correlation Coefficient

NetScout Systems  Remitly Global

Poor diversification

The 3 months correlation between NetScout and Remitly is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Remitly Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remitly Global 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 Remitly Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remitly Global has no effect on the direction of NetScout Systems i.e., NetScout Systems and Remitly Global go up and down completely randomly.

Pair Corralation between NetScout Systems and Remitly Global

Given the investment horizon of 90 days NetScout Systems is expected to generate 53.25 times less return on investment than Remitly Global. But when comparing it to its historical volatility, NetScout Systems is 1.41 times less risky than Remitly Global. It trades about 0.01 of its potential returns per unit of risk. Remitly Global is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Remitly Global on September 24, 2024 and sell it today you would earn a total of  883.00  from holding Remitly Global or generate 64.08% return on investment over 90 days.

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

NetScout Systems  vs.  Remitly Global

NetScout Systems

Risk-Adjusted Performance

0 of 100

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Remitly Global

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetScout Systems and Remitly Global

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

The idea behind NetScout Systems and Remitly Global 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.