Correlation Between EPAM Systems and Jack Henry
Can any of the company-specific risk be diversified away by investing in both EPAM Systems and Jack Henry 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 EPAM Systems and Jack Henry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and Jack Henry Associates, you can compare the effects of market volatilities on EPAM Systems and Jack Henry 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 EPAM Systems with a short position of Jack Henry. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and Jack Henry.
Diversification Opportunities for EPAM Systems and Jack Henry
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EPAM and Jack is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Jack Henry Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Henry Associates and EPAM Systems 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 EPAM Systems are associated (or correlated) with Jack Henry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Henry Associates has no effect on the direction of EPAM Systems i.e., EPAM Systems and Jack Henry go up and down completely randomly.
Pair Corralation between EPAM Systems and Jack Henry
Given the investment horizon of 90 days EPAM Systems is expected to generate 4.52 times more return on investment than Jack Henry. However, EPAM Systems is 4.52 times more volatile than Jack Henry Associates. It trades about 0.32 of its potential returns per unit of risk. Jack Henry Associates is currently generating about -0.34 per unit of risk. If you would invest 19,129 in EPAM Systems on August 27, 2024 and sell it today you would earn a total of 5,398 from holding EPAM Systems or generate 28.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. Jack Henry Associates
Performance |
| Timeline |
| EPAM Systems |
| Jack Henry Associates |
EPAM Systems and Jack Henry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and Jack Henry
The main advantage of trading using opposite EPAM Systems and Jack Henry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, Jack Henry 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 Jack Henry will offset losses from the drop in Jack Henry's long position.| EPAM Systems vs. Concentrix | EPAM Systems vs. Gartner | EPAM Systems vs. Accenture plc | EPAM Systems vs. International Business Machines |
| Jack Henry vs. Cognizant Technology Solutions | Jack Henry vs. CDW Corp | Jack Henry vs. Gartner | Jack Henry vs. Broadridge Financial Solutions |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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