Correlation Between Knowles Cor and NetScout Systems
Can any of the company-specific risk be diversified away by investing in both Knowles Cor 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 Knowles Cor and NetScout Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles Cor and NetScout Systems, you can compare the effects of market volatilities on Knowles Cor 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 Knowles Cor with a short position of NetScout Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles Cor and NetScout Systems.
Diversification Opportunities for Knowles Cor and NetScout Systems
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knowles and NetScout is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Knowles Cor 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 Knowles Cor 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 Knowles Cor i.e., Knowles Cor and NetScout Systems go up and down completely randomly.
Pair Corralation between Knowles Cor and NetScout Systems
Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 0.84 times more return on investment than NetScout Systems. However, Knowles Cor is 1.19 times less risky than NetScout Systems. It trades about 0.08 of its potential returns per unit of risk. NetScout Systems is currently generating about -0.03 per unit of risk. If you would invest 1,893 in Knowles Cor on September 23, 2024 and sell it today you would earn a total of 47.00 from holding Knowles Cor or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knowles Cor vs. NetScout Systems
Performance |
| Timeline |
| Knowles Cor |
| NetScout Systems |
Knowles Cor and NetScout Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles Cor and NetScout Systems
The main advantage of trading using opposite Knowles Cor and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles Cor 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.| Knowles Cor vs. Rigetti Computing | Knowles Cor vs. Quantum Computing | Knowles Cor vs. IONQ Inc | Knowles Cor vs. Quantum |
| NetScout Systems vs. Desktop Metal | NetScout Systems vs. Fabrinet | NetScout Systems vs. Kimball Electronics | NetScout Systems vs. Knowles Cor |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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