Correlation Between Looking Glass and Evertec

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

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

Diversification Opportunities for Looking Glass and Evertec

-0.23

Correlation Coefficient

Looking Glass  Evertec

Very good diversification

The 3 months correlation between Looking and Evertec is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Looking Glass Labs and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Looking Glass 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 Looking Glass Labs 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 Looking Glass i.e., Looking Glass and Evertec go up and down completely randomly.

Pair Corralation between Looking Glass and Evertec

If you would invest  3,393  in Evertec on September 18, 2024 and sell it today you would earn a total of  121.00  from holding Evertec or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Looking Glass Labs  vs.  Evertec

Looking Glass Labs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Evertec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Looking Glass and Evertec

The main advantage of trading using opposite Looking Glass and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Looking Glass 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 Looking Glass Labs 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.