Correlation Between Evertec and Sterling Check

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

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

Diversification Opportunities for Evertec and Sterling Check

0.54

Correlation Coefficient

Evertec  Sterling Check

Very weak diversification

The 3 months correlation between Evertec and Sterling is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Sterling Check Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Check Corp and Evertec 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 Evertec are associated (or correlated) with Sterling Check. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Check Corp has no effect on the direction of Evertec i.e., Evertec and Sterling Check go up and down completely randomly.

Pair Corralation between Evertec and Sterling Check

Given the investment horizon of 90 days Evertec is expected to generate 1.34 times more return on investment than Sterling Check. However, Evertec is 1.34 times more volatile than Sterling Check Corp. It trades about 0.09 of its potential returns per unit of risk. Sterling Check Corp is currently generating about 0.07 per unit of risk. If you would invest  3,309  in Evertec on September 12, 2024 and sell it today you would earn a total of  287.00  from holding Evertec or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	56.25%
Values	Daily Returns

Evertec  vs.  Sterling Check Corp

Evertec

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sterling Check Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Sterling Check Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sterling Check is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Evertec and Sterling Check

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

The idea behind Evertec and Sterling Check Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.