Correlation Between Evertec and OneSpan
Can any of the company-specific risk be diversified away by investing in both Evertec and OneSpan 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 OneSpan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evertec and OneSpan, you can compare the effects of market volatilities on Evertec and OneSpan 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 OneSpan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and OneSpan.
Diversification Opportunities for Evertec and OneSpan
Poor diversification
The 3 months correlation between Evertec and OneSpan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and OneSpan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpan 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 OneSpan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpan has no effect on the direction of Evertec i.e., Evertec and OneSpan go up and down completely randomly.
Pair Corralation between Evertec and OneSpan
Given the investment horizon of 90 days Evertec is expected to generate 24.8 times less return on investment than OneSpan. But when comparing it to its historical volatility, Evertec is 1.83 times less risky than OneSpan. It trades about 0.01 of its potential returns per unit of risk. OneSpan is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,003 in OneSpan on August 26, 2024 and sell it today you would earn a total of 785.00 from holding OneSpan or generate 78.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evertec vs. OneSpan
Performance |
| Timeline |
| Evertec |
| OneSpan |
Evertec and OneSpan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evertec and OneSpan
The main advantage of trading using opposite Evertec and OneSpan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec position performs unexpectedly, OneSpan 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 OneSpan will offset losses from the drop in OneSpan's long position.The idea behind Evertec and OneSpan 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.| OneSpan vs. Lesaka Technologies | OneSpan vs. Priority Technology Holdings | OneSpan vs. CSG Systems International | OneSpan vs. Sangoma Technologies Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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