Correlation Between Evertec and Five9

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Can any of the company-specific risk be diversified away by investing in both Evertec and Five9 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 Five9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evertec and Five9 Inc, you can compare the effects of market volatilities on Evertec and Five9 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 Five9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and Five9.

Diversification Opportunities for Evertec and Five9

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Evertec and Five9 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Five9 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five9 Inc 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 Five9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five9 Inc has no effect on the direction of Evertec i.e., Evertec and Five9 go up and down completely randomly.

Pair Corralation between Evertec and Five9

Given the investment horizon of 90 days Evertec is expected to under-perform the Five9. In addition to that, Evertec is 1.41 times more volatile than Five9 Inc. It trades about -0.01 of its total potential returns per unit of risk. Five9 Inc is currently generating about 0.07 per unit of volatility. If you would invest  6,066  in Five9 Inc on December 30, 2023 and sell it today you would earn a total of  145.00  from holding Five9 Inc or generate 2.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Evertec  vs.  Five9 Inc

 Performance 
       Timeline  
Evertec 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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.
Five9 Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Insignificant
Over the last 90 days Five9 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Evertec and Five9 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evertec and Five9

The main advantage of trading using opposite Evertec and Five9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec position performs unexpectedly, Five9 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 Five9 will offset losses from the drop in Five9's long position.
The idea behind Evertec and Five9 Inc 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.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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