Correlation Between Fiserv, and Wipro Limited

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

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

Diversification Opportunities for Fiserv, and Wipro Limited

0.36

Correlation Coefficient

Fiserv,  Wipro Limited

Weak diversification

The 3 months correlation between Fiserv, and Wipro is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv, and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited ADR and Fiserv, 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 Fiserv, are associated (or correlated) with Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of Fiserv, i.e., Fiserv, and Wipro Limited go up and down completely randomly.

Pair Corralation between Fiserv, and Wipro Limited

Allowing for the 90-day total investment horizon Fiserv, is expected to generate 0.89 times more return on investment than Wipro Limited. However, Fiserv, is 1.12 times less risky than Wipro Limited. It trades about 0.06 of its potential returns per unit of risk. Wipro Limited ADR is currently generating about -0.01 per unit of risk. If you would invest  22,059  in Fiserv, on November 27, 2024 and sell it today you would earn a total of  1,065  from holding Fiserv, or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fiserv,  vs.  Wipro Limited ADR

Fiserv,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Fiserv, is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Wipro Limited ADR

Risk-Adjusted Performance

Weak

Over the last 90 days Wipro Limited ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Wipro Limited is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fiserv, and Wipro Limited

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

The idea behind Fiserv, and Wipro Limited ADR 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.