Correlation Between Flywire Corp and Wex

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

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

Diversification Opportunities for Flywire Corp and Wex

0.29

Correlation Coefficient

Flywire Corp  Wex

Modest diversification

The 3 months correlation between Flywire and Wex is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Flywire Corp and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and Flywire Corp 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 Flywire Corp are associated (or correlated) with Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of Flywire Corp i.e., Flywire Corp and Wex go up and down completely randomly.

Pair Corralation between Flywire Corp and Wex

Given the investment horizon of 90 days Flywire Corp is expected to under-perform the Wex. But the stock apears to be less risky and, when comparing its historical volatility, Flywire Corp is 1.06 times less risky than Wex. The stock trades about -0.07 of its potential returns per unit of risk. The Wex Inc is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  17,838  in Wex Inc on November 19, 2024 and sell it today you would lose (2,369) from holding Wex Inc or give up 13.28% of portfolio value over 90 days.

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

Flywire Corp  vs.  Wex Inc

Flywire Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flywire Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Wex Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wex Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Flywire Corp and Wex

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

The idea behind Flywire Corp and Wex Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.