Correlation Between F5 Networks and Evertec

Can any of the company-specific risk be diversified away by investing in both F5 Networks and Evertec 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 F5 Networks and Evertec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between F5 Networks and Evertec, you can compare the effects of market volatilities on F5 Networks and Evertec 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 F5 Networks with a short position of Evertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of F5 Networks and Evertec.

Diversification Opportunities for F5 Networks and Evertec

-0.17

Correlation Coefficient

F5 Networks  Evertec

Good diversification

The 3 months correlation between FFIV and Evertec is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and F5 Networks 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 F5 Networks are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of F5 Networks i.e., F5 Networks and Evertec go up and down completely randomly.

Pair Corralation between F5 Networks and Evertec

Given the investment horizon of 90 days F5 Networks is expected to generate 1.02 times less return on investment than Evertec. But when comparing it to its historical volatility, F5 Networks is 1.18 times less risky than Evertec. It trades about 0.06 of its potential returns per unit of risk. Evertec is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Evertec on December 25, 2024 and sell it today you would earn a total of  233.50  from holding Evertec or generate 6.67% return on investment over 90 days.

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

F5 Networks  vs.  Evertec

F5 Networks

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, F5 Networks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Evertec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with F5 Networks and Evertec

The main advantage of trading using opposite F5 Networks and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F5 Networks position performs unexpectedly, Evertec 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 Evertec will offset losses from the drop in Evertec's long position.

The idea behind F5 Networks and Evertec 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.