Correlation Between Experian Plc and Verisk Analytics

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

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

Diversification Opportunities for Experian Plc and Verisk Analytics

-0.57

Correlation Coefficient

Experian Plc  Verisk Analytics

Excellent diversification

The 3 months correlation between Experian and Verisk is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Experian plc and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics and Experian Plc 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 Experian plc are associated (or correlated) with Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Experian Plc i.e., Experian Plc and Verisk Analytics go up and down completely randomly.

Pair Corralation between Experian Plc and Verisk Analytics

Assuming the 90 days horizon Experian plc is expected to under-perform the Verisk Analytics. But the stock apears to be less risky and, when comparing its historical volatility, Experian plc is 1.0 times less risky than Verisk Analytics. The stock trades about -0.03 of its potential returns per unit of risk. The Verisk Analytics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  23,985  in Verisk Analytics on September 18, 2024 and sell it today you would earn a total of  2,885  from holding Verisk Analytics or generate 12.03% return on investment over 90 days.

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

Experian plc  vs.  Verisk Analytics

Experian plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Experian Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Verisk Analytics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Verisk Analytics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Experian Plc and Verisk Analytics

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

The idea behind Experian plc and Verisk Analytics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.