Correlation Between Blackbaud and NetScout Systems

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

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

Diversification Opportunities for Blackbaud and NetScout Systems

0.34

Correlation Coefficient

Blackbaud  NetScout Systems

Weak diversification

The 3 months correlation between Blackbaud and NetScout is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Blackbaud 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 Blackbaud 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 Blackbaud i.e., Blackbaud and NetScout Systems go up and down completely randomly.

Pair Corralation between Blackbaud and NetScout Systems

Given the investment horizon of 90 days Blackbaud is expected to generate 2.1 times less return on investment than NetScout Systems. But when comparing it to its historical volatility, Blackbaud is 1.04 times less risky than NetScout Systems. It trades about 0.04 of its potential returns per unit of risk. NetScout Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,108  in NetScout Systems on April 25, 2025 and sell it today you would earn a total of  164.00  from holding NetScout Systems or generate 7.78% return on investment over 90 days.

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

Blackbaud  vs.  NetScout Systems

Blackbaud

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackbaud are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Blackbaud is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

NetScout Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 6 (%) 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 August 2025.

Pair Trading with Blackbaud and NetScout Systems

The main advantage of trading using opposite Blackbaud and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackbaud 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 Blackbaud 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.