Correlation Between ACI Worldwide and NetScout Systems
Can any of the company-specific risk be diversified away by investing in both ACI Worldwide 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 ACI Worldwide and NetScout Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACI Worldwide and NetScout Systems, you can compare the effects of market volatilities on ACI Worldwide 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 ACI Worldwide with a short position of NetScout Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACI Worldwide and NetScout Systems.
Diversification Opportunities for ACI Worldwide and NetScout Systems
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ACI and NetScout is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and ACI Worldwide 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 ACI Worldwide 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 ACI Worldwide i.e., ACI Worldwide and NetScout Systems go up and down completely randomly.
Pair Corralation between ACI Worldwide and NetScout Systems
Given the investment horizon of 90 days ACI Worldwide is expected to generate 1.14 times more return on investment than NetScout Systems. However, ACI Worldwide is 1.14 times more volatile than NetScout Systems. It trades about 0.22 of its potential returns per unit of risk. NetScout Systems is currently generating about 0.07 per unit of risk. If you would invest 4,917 in ACI Worldwide on August 24, 2024 and sell it today you would earn a total of 655.00 from holding ACI Worldwide or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACI Worldwide vs. NetScout Systems
Performance |
| Timeline |
| ACI Worldwide |
| NetScout Systems |
ACI Worldwide and NetScout Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACI Worldwide and NetScout Systems
The main advantage of trading using opposite ACI Worldwide and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACI Worldwide 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.| ACI Worldwide vs. NetScout Systems | ACI Worldwide vs. Consensus Cloud Solutions | ACI Worldwide vs. CSG Systems International | ACI Worldwide vs. Remitly Global |
| NetScout Systems vs. Progress Software | NetScout Systems vs. CommVault Systems | NetScout Systems vs. Blackbaud | NetScout Systems vs. ACI Worldwide |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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