Correlation Between Edgio and PagSeguro Digital
Can any of the company-specific risk be diversified away by investing in both Edgio and PagSeguro Digital 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 Edgio and PagSeguro Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgio Inc and PagSeguro Digital, you can compare the effects of market volatilities on Edgio and PagSeguro Digital 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 Edgio with a short position of PagSeguro Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgio and PagSeguro Digital.
Diversification Opportunities for Edgio and PagSeguro Digital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edgio and PagSeguro is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Edgio Inc and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and Edgio 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 Edgio Inc are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Edgio i.e., Edgio and PagSeguro Digital go up and down completely randomly.
Pair Corralation between Edgio and PagSeguro Digital
Given the investment horizon of 90 days Edgio Inc is expected to generate 132.24 times more return on investment than PagSeguro Digital. However, Edgio is 132.24 times more volatile than PagSeguro Digital. It trades about 0.32 of its potential returns per unit of risk. PagSeguro Digital is currently generating about -0.02 per unit of risk. If you would invest 3.00 in Edgio Inc on August 28, 2024 and sell it today you would lose (1.00) from holding Edgio Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Edgio Inc vs. PagSeguro Digital
Performance |
| Timeline |
| Edgio Inc |
| PagSeguro Digital |
Edgio and PagSeguro Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgio and PagSeguro Digital
The main advantage of trading using opposite Edgio and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgio position performs unexpectedly, PagSeguro Digital 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 PagSeguro Digital will offset losses from the drop in PagSeguro Digital's long position.The idea behind Edgio Inc and PagSeguro Digital 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.| PagSeguro Digital vs. Marqeta | PagSeguro Digital vs. StoneCo | PagSeguro Digital vs. Confluent | PagSeguro Digital vs. Dlocal |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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