Correlation Between Dlocal and Endava

Can any of the company-specific risk be diversified away by investing in both Dlocal and Endava 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 Dlocal and Endava into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dlocal and Endava, you can compare the effects of market volatilities on Dlocal and Endava 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 Dlocal with a short position of Endava. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dlocal and Endava.

Diversification Opportunities for Dlocal and Endava

0.81

Correlation Coefficient

Dlocal  Endava

Very poor diversification

The 3 months correlation between Dlocal and Endava is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and Endava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endava and Dlocal 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 Dlocal are associated (or correlated) with Endava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endava has no effect on the direction of Dlocal i.e., Dlocal and Endava go up and down completely randomly.

Pair Corralation between Dlocal and Endava

Considering the 90-day investment horizon Dlocal is expected to generate 2.0 times more return on investment than Endava. However, Dlocal is 2.0 times more volatile than Endava. It trades about -0.07 of its potential returns per unit of risk. Endava is currently generating about -0.28 per unit of risk. If you would invest  1,121  in Dlocal on December 28, 2024 and sell it today you would lose (288.00) from holding Dlocal or give up 25.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Dlocal  vs.  Endava

Dlocal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dlocal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Endava

Risk-Adjusted Performance

Very Weak

Over the last 90 days Endava has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dlocal and Endava

The main advantage of trading using opposite Dlocal and Endava positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dlocal position performs unexpectedly, Endava 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 Endava will offset losses from the drop in Endava's long position.

The idea behind Dlocal and Endava 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.