Correlation Between Evertec and International Money

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

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

Diversification Opportunities for Evertec and International Money

0.64

Correlation Coefficient

Evertec  International Money

Poor diversification

The 3 months correlation between Evertec and International is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and International Money Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Money 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 International Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Money has no effect on the direction of Evertec i.e., Evertec and International Money go up and down completely randomly.

Pair Corralation between Evertec and International Money

Given the investment horizon of 90 days Evertec is expected to generate 0.88 times more return on investment than International Money. However, Evertec is 1.13 times less risky than International Money. It trades about -0.11 of its potential returns per unit of risk. International Money Express is currently generating about -0.15 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.  International Money Express

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 weak 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.

International Money

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Money Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Evertec and International Money

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

The idea behind Evertec and International Money Express 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.