Correlation Between Evertec and Maiden Holdings

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

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

Diversification Opportunities for Evertec and Maiden Holdings

-0.34

Correlation Coefficient

Evertec  Maiden Holdings

Very good diversification

The 3 months correlation between Evertec and Maiden is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Maiden Holdings North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings North 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 Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings North has no effect on the direction of Evertec i.e., Evertec and Maiden Holdings go up and down completely randomly.

Pair Corralation between Evertec and Maiden Holdings

Given the investment horizon of 90 days Evertec is expected to generate 1.05 times less return on investment than Maiden Holdings. But when comparing it to its historical volatility, Evertec is 1.16 times less risky than Maiden Holdings. It trades about 0.05 of its potential returns per unit of risk. Maiden Holdings North is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Maiden Holdings North on October 8, 2024 and sell it today you would earn a total of  65.00  from holding Maiden Holdings North or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Evertec  vs.  Maiden Holdings North

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

Maiden Holdings North

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings North are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Maiden Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Evertec and Maiden Holdings

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

The idea behind Evertec and Maiden Holdings North 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.