Correlation Between ACI Worldwide and Evertec

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

Diversification Opportunities for ACI Worldwide and Evertec

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ACI and Evertec is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and ACI Worldwide 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 ACI Worldwide 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 ACI Worldwide i.e., ACI Worldwide and Evertec go up and down completely randomly.

Pair Corralation between ACI Worldwide and Evertec

Given the investment horizon of 90 days ACI Worldwide is expected to generate 0.91 times more return on investment than Evertec. However, ACI Worldwide is 1.1 times less risky than Evertec. It trades about 0.1 of its potential returns per unit of risk. Evertec is currently generating about -0.08 per unit of risk. If you would invest  5,243  in ACI Worldwide on October 20, 2024 and sell it today you would earn a total of  141.00  from holding ACI Worldwide or generate 2.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

ACI Worldwide  vs.  Evertec

 Performance 
       Timeline  
ACI Worldwide 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ACI Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, ACI Worldwide may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Evertec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

ACI Worldwide and Evertec Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ACI Worldwide and Evertec

The main advantage of trading using opposite ACI Worldwide and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACI Worldwide 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.
The idea behind ACI Worldwide and Evertec 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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