Correlation Between EPlus and Meridianlink

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

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

Diversification Opportunities for EPlus and Meridianlink

-0.31

Correlation Coefficient

EPlus  Meridianlink

Very good diversification

The 3 months correlation between EPlus and Meridianlink is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ePlus inc and Meridianlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridianlink and EPlus 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 ePlus inc are associated (or correlated) with Meridianlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridianlink has no effect on the direction of EPlus i.e., EPlus and Meridianlink go up and down completely randomly.

Pair Corralation between EPlus and Meridianlink

Given the investment horizon of 90 days ePlus inc is expected to under-perform the Meridianlink. In addition to that, EPlus is 1.45 times more volatile than Meridianlink. It trades about -0.06 of its total potential returns per unit of risk. Meridianlink is currently generating about -0.02 per unit of volatility. If you would invest  2,386  in Meridianlink on September 13, 2024 and sell it today you would lose (80.00) from holding Meridianlink or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ePlus inc  vs.  Meridianlink

ePlus inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with EPlus and Meridianlink

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

The idea behind ePlus inc and Meridianlink 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.