Correlation Between Progress Software and Wex

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

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

Diversification Opportunities for Progress Software and Wex

0.5

Correlation Coefficient

Progress Software  Wex

Very weak diversification

The 3 months correlation between Progress and Wex is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Progress Software and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and Progress Software 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 Progress Software 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 Progress Software i.e., Progress Software and Wex go up and down completely randomly.

Pair Corralation between Progress Software and Wex

Given the investment horizon of 90 days Progress Software is expected to under-perform the Wex. But the stock apears to be less risky and, when comparing its historical volatility, Progress Software is 1.49 times less risky than Wex. The stock trades about -0.15 of its potential returns per unit of risk. The Wex Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  17,068  in Wex Inc on December 28, 2024 and sell it today you would lose (1,536) from holding Wex Inc or give up 9.0% of portfolio value over 90 days.

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

Progress Software  vs.  Wex Inc

Progress Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Progress Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 Progress Software and Wex

The main advantage of trading using opposite Progress Software and Wex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progress Software 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 Progress Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.