Correlation Between Verisk Analytics and Fiserv

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

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

Diversification Opportunities for Verisk Analytics and Fiserv

0.84

Correlation Coefficient

Verisk Analytics  Fiserv

Very poor diversification

The 3 months correlation between Verisk and Fiserv is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and Fiserv go up and down completely randomly.

Pair Corralation between Verisk Analytics and Fiserv

Assuming the 90 days trading horizon Verisk Analytics is expected to generate 0.81 times more return on investment than Fiserv. However, Verisk Analytics is 1.23 times less risky than Fiserv. It trades about 0.05 of its potential returns per unit of risk. Fiserv Inc is currently generating about 0.01 per unit of risk. If you would invest  26,419  in Verisk Analytics on December 29, 2024 and sell it today you would earn a total of  1,021  from holding Verisk Analytics or generate 3.86% return on investment over 90 days.

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

Verisk Analytics  vs.  Fiserv Inc

Verisk Analytics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Verisk Analytics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fiserv Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Fiserv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fiserv is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Verisk Analytics and Fiserv

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

The idea behind Verisk Analytics and Fiserv 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.