Correlation Between Five9 and Evertec

Can any of the company-specific risk be diversified away by investing in both Five9 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 Five9 and Evertec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Five9 Inc and Evertec, you can compare the effects of market volatilities on Five9 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 Five9 with a short position of Evertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five9 and Evertec.

Diversification Opportunities for Five9 and Evertec

0.86

Correlation Coefficient

Five9  Evertec

Very poor diversification

The 3 months correlation between Five9 and Evertec is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Five9 Inc and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Five9 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 Five9 Inc 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 Five9 i.e., Five9 and Evertec go up and down completely randomly.

Pair Corralation between Five9 and Evertec

Given the investment horizon of 90 days Five9 Inc is expected to generate 1.85 times more return on investment than Evertec. However, Five9 is 1.85 times more volatile than Evertec. It trades about 0.27 of its potential returns per unit of risk. Evertec is currently generating about 0.09 per unit of risk. If you would invest  3,092  in Five9 Inc on September 20, 2024 and sell it today you would earn a total of  1,181  from holding Five9 Inc or generate 38.2% return on investment over 90 days.

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

Five9 Inc  vs.  Evertec

Five9 Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Five9 Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Five9 displayed solid returns over the last few months and may actually be approaching a breakup point.

Evertec

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 5 (%) 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.

Pair Trading with Five9 and Evertec

The main advantage of trading using opposite Five9 and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five9 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 Five9 Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.