Correlation Between Evertec and Credit Enhanced

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

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

Diversification Opportunities for Evertec and Credit Enhanced

-0.31

Correlation Coefficient

Evertec  Credit Enhanced

Very good diversification

The 3 months correlation between Evertec and Credit is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts 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 Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of Evertec i.e., Evertec and Credit Enhanced go up and down completely randomly.

Pair Corralation between Evertec and Credit Enhanced

Given the investment horizon of 90 days Evertec is expected to generate 2.08 times less return on investment than Credit Enhanced. But when comparing it to its historical volatility, Evertec is 1.23 times less risky than Credit Enhanced. It trades about 0.01 of its potential returns per unit of risk. Credit Enhanced Corts is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,428  in Credit Enhanced Corts on September 23, 2024 and sell it today you would earn a total of  273.00  from holding Credit Enhanced Corts or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.99%
Values	Daily Returns

Evertec  vs.  Credit Enhanced Corts

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.

Credit Enhanced Corts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Enhanced Corts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Credit Enhanced is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evertec and Credit Enhanced

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

The idea behind Evertec and Credit Enhanced Corts 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.