Correlation Between Equifax and CLARIVATE PLC

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

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

Diversification Opportunities for Equifax and CLARIVATE PLC

0.74

Correlation Coefficient

Equifax  CLARIVATE PLC

Poor diversification

The 3 months correlation between Equifax and CLARIVATE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and CLARIVATE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLARIVATE PLC and Equifax 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 Equifax are associated (or correlated) with CLARIVATE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLARIVATE PLC has no effect on the direction of Equifax i.e., Equifax and CLARIVATE PLC go up and down completely randomly.

Pair Corralation between Equifax and CLARIVATE PLC

Considering the 90-day investment horizon Equifax is expected to under-perform the CLARIVATE PLC. But the stock apears to be less risky and, when comparing its historical volatility, Equifax is 2.85 times less risky than CLARIVATE PLC. The stock trades about -0.15 of its potential returns per unit of risk. The CLARIVATE PLC is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  657.00  in CLARIVATE PLC on September 13, 2024 and sell it today you would lose (119.00) from holding CLARIVATE PLC or give up 18.11% of portfolio value over 90 days.

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

Equifax  vs.  CLARIVATE PLC

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

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

CLARIVATE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Equifax and CLARIVATE PLC

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

The idea behind Equifax and CLARIVATE PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.