Correlation Between Evertec and EVO Payments

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Can any of the company-specific risk be diversified away by investing in both Evertec and EVO Payments 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 EVO Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evertec and EVO Payments, you can compare the effects of market volatilities on Evertec and EVO Payments 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 EVO Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and EVO Payments.

Diversification Opportunities for Evertec and EVO Payments

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Evertec and EVO is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and EVO Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVO Payments 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 EVO Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVO Payments has no effect on the direction of Evertec i.e., Evertec and EVO Payments go up and down completely randomly.

Pair Corralation between Evertec and EVO Payments

If you would invest  3,257  in Evertec on December 30, 2023 and sell it today you would earn a total of  733.00  from holding Evertec or generate 22.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy0.4%
ValuesDaily Returns

Evertec  vs.  EVO Payments

 Performance 
       Timeline  
Evertec 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
EVO Payments 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days EVO Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EVO Payments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Evertec and EVO Payments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evertec and EVO Payments

The main advantage of trading using opposite Evertec and EVO Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec position performs unexpectedly, EVO Payments 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 EVO Payments will offset losses from the drop in EVO Payments' long position.
The idea behind Evertec and EVO Payments 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.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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