Correlation Between Wex and Zuora

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

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

Diversification Opportunities for Wex and Zuora

0.6

Correlation Coefficient

Wex  Zuora

Poor diversification

The 3 months correlation between Wex and Zuora is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Zuora Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuora Inc 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 Zuora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuora Inc has no effect on the direction of Wex i.e., Wex and Zuora go up and down completely randomly.

Pair Corralation between Wex and Zuora

Considering the 90-day investment horizon Wex Inc is expected to under-perform the Zuora. In addition to that, Wex is 24.69 times more volatile than Zuora Inc. It trades about -0.06 of its total potential returns per unit of risk. Zuora Inc is currently generating about 0.22 per unit of volatility. If you would invest  993.00  in Zuora Inc on December 26, 2024 and sell it today you would earn a total of  9.00  from holding Zuora Inc or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.38%
Values	Daily Returns

Wex Inc  vs.  Zuora Inc

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.

Zuora Inc

Risk-Adjusted Performance

Solid

Over the last 90 days Zuora Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zuora is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wex and Zuora

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

The idea behind Wex Inc and Zuora 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.