Correlation Between I3 Verticals and Evertec

Can any of the company-specific risk be diversified away by investing in both I3 Verticals 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 I3 Verticals and Evertec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between i3 Verticals and Evertec, you can compare the effects of market volatilities on I3 Verticals 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 I3 Verticals with a short position of Evertec. Check out your portfolio center. Please also check ongoing floating volatility patterns of I3 Verticals and Evertec.

Diversification Opportunities for I3 Verticals and Evertec

0.6

Correlation Coefficient

I3 Verticals  Evertec

Poor diversification

The 3 months correlation between IIIV and Evertec is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding i3 Verticals and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and I3 Verticals 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 i3 Verticals 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 I3 Verticals i.e., I3 Verticals and Evertec go up and down completely randomly.

Pair Corralation between I3 Verticals and Evertec

Given the investment horizon of 90 days i3 Verticals is expected to generate 1.27 times more return on investment than Evertec. However, I3 Verticals is 1.27 times more volatile than Evertec. It trades about 0.08 of its potential returns per unit of risk. Evertec is currently generating about 0.05 per unit of risk. If you would invest  2,266  in i3 Verticals on August 30, 2024 and sell it today you would earn a total of  220.00  from holding i3 Verticals or generate 9.71% return on investment over 90 days.

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

i3 Verticals  vs.  Evertec

i3 Verticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in i3 Verticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, I3 Verticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Evertec

Risk-Adjusted Performance

4 of 100

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 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.

Pair Trading with I3 Verticals and Evertec

The main advantage of trading using opposite I3 Verticals and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I3 Verticals 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 i3 Verticals 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.