Correlation Between Wex and Pegasystems
Can any of the company-specific risk be diversified away by investing in both Wex and Pegasystems 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 Pegasystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Pegasystems, you can compare the effects of market volatilities on Wex and Pegasystems 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 Pegasystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Pegasystems.
Diversification Opportunities for Wex and Pegasystems
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wex and Pegasystems is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems 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 Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Wex i.e., Wex and Pegasystems go up and down completely randomly.
Pair Corralation between Wex and Pegasystems
Considering the 90-day investment horizon Wex Inc is expected to under-perform the Pegasystems. But the stock apears to be less risky and, when comparing its historical volatility, Wex Inc is 1.79 times less risky than Pegasystems. The stock trades about -0.02 of its potential returns per unit of risk. The Pegasystems is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Pegasystems on November 4, 2024 and sell it today you would earn a total of 5,861 from holding Pegasystems or generate 117.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wex Inc vs. Pegasystems
Performance |
| Timeline |
| Wex Inc |
| Pegasystems |
Wex and Pegasystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and Pegasystems
The main advantage of trading using opposite Wex and Pegasystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, Pegasystems 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 Pegasystems will offset losses from the drop in Pegasystems' long position.| Wex vs. CSG Systems International | Wex vs. VeriSign | Wex vs. Consensus Cloud Solutions | Wex vs. Global Blue Group |
| Pegasystems vs. Wex Inc | Pegasystems vs. Cognex | Pegasystems vs. Progress Software | Pegasystems vs. Fair Isaac |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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