Correlation Between Fleetcor Technologies and VeriSign

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

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

Diversification Opportunities for Fleetcor Technologies and VeriSign

0.26

Correlation Coefficient

Fleetcor Technologies  VeriSign

Modest diversification

The 3 months correlation between Fleetcor and VeriSign is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fleetcor Technologies and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign and Fleetcor Technologies 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 Fleetcor Technologies are associated (or correlated) with VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Fleetcor Technologies i.e., Fleetcor Technologies and VeriSign go up and down completely randomly.

Pair Corralation between Fleetcor Technologies and VeriSign

If you would invest  17,877  in VeriSign on August 30, 2024 and sell it today you would earn a total of  1,286  from holding VeriSign or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Fleetcor Technologies  vs.  VeriSign

Fleetcor Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fleetcor Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Fleetcor Technologies is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

VeriSign

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VeriSign is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fleetcor Technologies and VeriSign

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

The idea behind Fleetcor Technologies and VeriSign 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.