Correlation Between Wex and Pegasystems

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

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

Diversification Opportunities for Wex and Pegasystems

0.76

Correlation Coefficient

Wex  Pegasystems

Poor diversification

The 3 months correlation between Wex and Pegasystems is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems and Wex 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 Wex Inc are associated (or correlated) with Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Wex i.e., Wex and Pegasystems go up and down completely randomly.

Pair Corralation between Wex and Pegasystems

Considering the 90-day investment horizon Wex Inc is expected to generate 0.81 times more return on investment than Pegasystems. However, Wex Inc is 1.23 times less risky than Pegasystems. It trades about -0.04 of its potential returns per unit of risk. Pegasystems is currently generating about -0.11 per unit of risk. If you would invest  17,068  in Wex Inc on December 29, 2024 and sell it today you would lose (1,612) from holding Wex Inc or give up 9.44% of portfolio value over 90 days.

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

Wex Inc  vs.  Pegasystems

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.

Pegasystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pegasystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Wex and Pegasystems

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

The idea behind Wex Inc and Pegasystems 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.