Correlation Between Fiserv and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both Fiserv and EPAM 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 Fiserv and EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiserv Inc and EPAM Systems, you can compare the effects of market volatilities on Fiserv and EPAM 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 Fiserv with a short position of EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and EPAM Systems.
Diversification Opportunities for Fiserv and EPAM Systems
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fiserv and EPAM is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems and Fiserv 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 Fiserv Inc are associated (or correlated) with EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of Fiserv i.e., Fiserv and EPAM Systems go up and down completely randomly.
Pair Corralation between Fiserv and EPAM Systems
Given the investment horizon of 90 days Fiserv is expected to generate 3.28 times less return on investment than EPAM Systems. But when comparing it to its historical volatility, Fiserv Inc is 1.48 times less risky than EPAM Systems. It trades about 0.11 of its potential returns per unit of risk. EPAM Systems is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 23,382 in EPAM Systems on November 1, 2024 and sell it today you would earn a total of 1,803 from holding EPAM Systems or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.42% |
| Values | Daily Returns |
Fiserv Inc vs. EPAM Systems
Performance |
| Timeline |
| Fiserv Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| EPAM Systems |
Fiserv and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiserv and EPAM Systems
The main advantage of trading using opposite Fiserv and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiserv position performs unexpectedly, EPAM 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| Fiserv vs. Jack Henry Associates | Fiserv vs. Cognizant Technology Solutions | Fiserv vs. CDW Corp | Fiserv vs. Broadridge Financial Solutions |
| EPAM Systems vs. Concentrix | EPAM Systems vs. Gartner | EPAM Systems vs. Accenture plc | EPAM Systems vs. International Business Machines |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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