Correlation Between Sterling Check and Evertec
Can any of the company-specific risk be diversified away by investing in both Sterling Check and Evertec 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 Sterling Check and Evertec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Check Corp and Evertec, you can compare the effects of market volatilities on Sterling Check and Evertec 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 Sterling Check with a short position of Evertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Check and Evertec.
Diversification Opportunities for Sterling Check and Evertec
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sterling and Evertec is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Check Corp and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Sterling Check 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 Sterling Check Corp are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Sterling Check i.e., Sterling Check and Evertec go up and down completely randomly.
Pair Corralation between Sterling Check and Evertec
Given the investment horizon of 90 days Sterling Check is expected to generate 9.52 times less return on investment than Evertec. But when comparing it to its historical volatility, Sterling Check Corp is 1.31 times less risky than Evertec. It trades about 0.02 of its potential returns per unit of risk. Evertec is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,266 in Evertec on August 26, 2024 and sell it today you would earn a total of 365.00 from holding Evertec or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.36% |
| Values | Daily Returns |
Sterling Check Corp vs. Evertec
Performance |
| Timeline |
| Sterling Check Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Evertec |
Sterling Check and Evertec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Check and Evertec
The main advantage of trading using opposite Sterling Check and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Check position performs unexpectedly, Evertec 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 Evertec will offset losses from the drop in Evertec's long position.| Sterling Check vs. EverCommerce | Sterling Check vs. Evertec | Sterling Check vs. Consensus Cloud Solutions | Sterling Check vs. CSG Systems International |
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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