Correlation Between Equifax and Shift4 Payments
Can any of the company-specific risk be diversified away by investing in both Equifax and Shift4 Payments 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 Equifax and Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and Shift4 Payments, you can compare the effects of market volatilities on Equifax and Shift4 Payments 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 Equifax with a short position of Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and Shift4 Payments.
Diversification Opportunities for Equifax and Shift4 Payments
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Equifax and Shift4 is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments and Equifax 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 Equifax are associated (or correlated) with Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of Equifax i.e., Equifax and Shift4 Payments go up and down completely randomly.
Pair Corralation between Equifax and Shift4 Payments
Considering the 90-day investment horizon Equifax is expected to under-perform the Shift4 Payments. But the stock apears to be less risky and, when comparing its historical volatility, Equifax is 1.65 times less risky than Shift4 Payments. The stock trades about -0.06 of its potential returns per unit of risk. The Shift4 Payments is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 9,113 in Shift4 Payments on August 31, 2024 and sell it today you would earn a total of 2,382 from holding Shift4 Payments or generate 26.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equifax vs. Shift4 Payments
Performance |
| Timeline |
| Equifax |
| Shift4 Payments |
Equifax and Shift4 Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and Shift4 Payments
The main advantage of trading using opposite Equifax and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.| Equifax vs. CRA International | Equifax vs. Huron Consulting Group | Equifax vs. Forrester Research | Equifax vs. Exponent |
| Shift4 Payments vs. SentinelOne | Shift4 Payments vs. Confluent | Shift4 Payments vs. Hashicorp | Shift4 Payments vs. MongoDB |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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