Correlation Between Evertec and Looking Glass

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

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

Diversification Opportunities for Evertec and Looking Glass

-0.23

Correlation Coefficient

Evertec  Looking Glass

Very good diversification

The 3 months correlation between Evertec and Looking is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Looking Glass Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Looking Glass Labs 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 Looking Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Looking Glass Labs has no effect on the direction of Evertec i.e., Evertec and Looking Glass go up and down completely randomly.

Pair Corralation between Evertec and Looking Glass

If you would invest  3,445  in Evertec on September 15, 2024 and sell it today you would earn a total of  69.00  from holding Evertec or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Evertec  vs.  Looking Glass Labs

Evertec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Looking Glass Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Looking Glass Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Looking Glass is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Evertec and Looking Glass

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

The idea behind Evertec and Looking Glass Labs 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.