Correlation Between Global Blue and Evertec

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

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

Diversification Opportunities for Global Blue and Evertec

0.55

Correlation Coefficient

Global Blue  Evertec

Very weak diversification

The 3 months correlation between Global and Evertec is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Global Blue 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 Global Blue Group are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Global Blue i.e., Global Blue and Evertec go up and down completely randomly.

Pair Corralation between Global Blue and Evertec

Allowing for the 90-day total investment horizon Global Blue Group is expected to generate 2.24 times more return on investment than Evertec. However, Global Blue is 2.24 times more volatile than Evertec. It trades about 0.08 of its potential returns per unit of risk. Evertec is currently generating about 0.07 per unit of risk. If you would invest  532.00  in Global Blue Group on September 1, 2024 and sell it today you would earn a total of  83.00  from holding Global Blue Group or generate 15.6% return on investment over 90 days.

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

Global Blue Group  vs.  Evertec

Global Blue Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Evertec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 5 (%) 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 December 2024.

Pair Trading with Global Blue and Evertec

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

The idea behind Global Blue Group and Evertec 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.