Correlation Between Evertec and NetScout Systems

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

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

Diversification Opportunities for Evertec and NetScout Systems

-0.1

Correlation Coefficient

Evertec  NetScout Systems

Good diversification

The 3 months correlation between Evertec and NetScout is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Evertec 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 Evertec 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 Evertec i.e., Evertec and NetScout Systems go up and down completely randomly.

Pair Corralation between Evertec and NetScout Systems

Given the investment horizon of 90 days Evertec is expected to generate 0.85 times more return on investment than NetScout Systems. However, Evertec is 1.18 times less risky than NetScout Systems. It trades about 0.01 of its potential returns per unit of risk. NetScout Systems is currently generating about -0.02 per unit of risk. If you would invest  3,608  in Evertec on February 9, 2025 and sell it today you would lose (35.00) from holding Evertec or give up 0.97% of portfolio value over 90 days.

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

Evertec  vs.  NetScout Systems

Evertec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in June 2025.

NetScout Systems

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Evertec and NetScout Systems

The main advantage of trading using opposite Evertec and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec 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 Evertec 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.