Correlation Between Frequency Electronics and NetScout Systems
Can any of the company-specific risk be diversified away by investing in both Frequency Electronics 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 Frequency Electronics and NetScout Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and NetScout Systems, you can compare the effects of market volatilities on Frequency Electronics 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 Frequency Electronics with a short position of NetScout Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and NetScout Systems.
Diversification Opportunities for Frequency Electronics and NetScout Systems
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frequency and NetScout is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems and Frequency Electronics 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 Frequency Electronics 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 Frequency Electronics i.e., Frequency Electronics and NetScout Systems go up and down completely randomly.
Pair Corralation between Frequency Electronics and NetScout Systems
Given the investment horizon of 90 days Frequency Electronics is expected to generate 2.74 times more return on investment than NetScout Systems. However, Frequency Electronics is 2.74 times more volatile than NetScout Systems. It trades about 0.14 of its potential returns per unit of risk. NetScout Systems is currently generating about 0.09 per unit of risk. If you would invest 1,835 in Frequency Electronics on April 24, 2025 and sell it today you would earn a total of 704.00 from holding Frequency Electronics or generate 38.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frequency Electronics vs. NetScout Systems
Performance |
| Timeline |
| Frequency Electronics |
| NetScout Systems |
Frequency Electronics and NetScout Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frequency Electronics and NetScout Systems
The main advantage of trading using opposite Frequency Electronics and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics 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.| Frequency Electronics vs. Optical Cable | Frequency Electronics vs. KVH Industries | Frequency Electronics vs. Knowles Cor | Frequency Electronics vs. Comtech Telecommunications Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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