Correlation Between Wex and Evertec
Can any of the company-specific risk be diversified away by investing in both Wex 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 Wex and Evertec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Evertec, you can compare the effects of market volatilities on Wex 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 Wex with a short position of Evertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Evertec.
Diversification Opportunities for Wex and Evertec
Good diversification
The 3 months correlation between Wex and Evertec is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Wex 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 Wex Inc 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 Wex i.e., Wex and Evertec go up and down completely randomly.
Pair Corralation between Wex and Evertec
Considering the 90-day investment horizon Wex Inc is expected to generate 1.05 times more return on investment than Evertec. However, Wex is 1.05 times more volatile than Evertec. It trades about 0.02 of its potential returns per unit of risk. Evertec is currently generating about 0.02 per unit of risk. If you would invest 17,128 in Wex Inc on August 23, 2024 and sell it today you would earn a total of 1,045 from holding Wex Inc or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wex Inc vs. Evertec
Performance |
| Timeline |
| Wex Inc |
| Evertec |
Wex and Evertec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and Evertec
The main advantage of trading using opposite Wex and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex 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.| Wex vs. CSG Systems International | Wex vs. VeriSign | Wex vs. Consensus Cloud Solutions | Wex vs. Global Blue Group |
| Evertec vs. Lesaka Technologies | Evertec vs. CSG Systems International | Evertec vs. OneSpan | Evertec 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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