Correlation Between Evertec and Five9

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

0.81

Correlation Coefficient

Evertec  Five9

Very poor diversification

The 3 months correlation between Evertec and Five9 is 0.81. 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 generate 0.55 times more return on investment than Five9. However, Evertec is 1.83 times less risky than Five9. It trades about 0.01 of its potential returns per unit of risk. Five9 Inc is currently generating about -0.02 per unit of risk. If you would invest  3,255  in Evertec on September 24, 2024 and sell it today you would earn a total of  106.00  from holding Evertec or generate 3.26% return on investment over 90 days.

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

Evertec  vs.  Five9 Inc

Evertec

Risk-Adjusted Performance

0 of 100

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Five9 Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Five9 Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Five9 displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.