Correlation Between EPAM Systems and Jack Henry

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

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

Diversification Opportunities for EPAM Systems and Jack Henry

-0.44

Correlation Coefficient

EPAM Systems  Jack Henry

Very good diversification

The 3 months correlation between EPAM and Jack is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Jack Henry Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Henry Associates and EPAM Systems 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 EPAM Systems are associated (or correlated) with Jack Henry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Henry Associates has no effect on the direction of EPAM Systems i.e., EPAM Systems and Jack Henry go up and down completely randomly.

Pair Corralation between EPAM Systems and Jack Henry

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Jack Henry. In addition to that, EPAM Systems is 1.64 times more volatile than Jack Henry Associates. It trades about -0.19 of its total potential returns per unit of risk. Jack Henry Associates is currently generating about 0.03 per unit of volatility. If you would invest  17,630  in Jack Henry Associates on December 27, 2024 and sell it today you would earn a total of  302.00  from holding Jack Henry Associates or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EPAM Systems  vs.  Jack Henry Associates

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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.

Jack Henry Associates

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Henry Associates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Jack Henry is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EPAM Systems and Jack Henry

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

The idea behind EPAM Systems and Jack Henry Associates 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.