Correlation Between Evertec and EverCommerce

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

By analyzing existing cross correlation between Evertec and EverCommerce, you can compare the effects of market volatilities on Evertec and EverCommerce 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 EverCommerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and EverCommerce.

Diversification Opportunities for Evertec and EverCommerce

0.61

Correlation Coefficient

Evertec  EverCommerce

Poor diversification

The 3 months correlation between Evertec and EverCommerce is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and EverCommerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverCommerce 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 EverCommerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverCommerce has no effect on the direction of Evertec i.e., Evertec and EverCommerce go up and down completely randomly.

Pair Corralation between Evertec and EverCommerce

Given the investment horizon of 90 days Evertec is expected to generate 0.65 times more return on investment than EverCommerce. However, Evertec is 1.53 times less risky than EverCommerce. It trades about -0.11 of its potential returns per unit of risk. EverCommerce is currently generating about -0.14 per unit of risk. If you would invest  3,585  in Evertec on November 27, 2024 and sell it today you would lose (319.00) from holding Evertec or give up 8.9% of portfolio value over 90 days.

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

Evertec  vs.  EverCommerce

Evertec

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

EverCommerce

Risk-Adjusted Performance

Very Weak

Over the last 90 days EverCommerce 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 fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Evertec and EverCommerce

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

The idea behind Evertec and EverCommerce 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.