Correlation Between PagSeguro Digital and Wex

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

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

Diversification Opportunities for PagSeguro Digital and Wex

0.12

Correlation Coefficient

PagSeguro Digital  Wex

Average diversification

The 3 months correlation between PagSeguro and Wex is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PagSeguro Digital and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and PagSeguro Digital 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 PagSeguro Digital are associated (or correlated) with Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of PagSeguro Digital i.e., PagSeguro Digital and Wex go up and down completely randomly.

Pair Corralation between PagSeguro Digital and Wex

Given the investment horizon of 90 days PagSeguro Digital is expected to under-perform the Wex. But the stock apears to be less risky and, when comparing its historical volatility, PagSeguro Digital is 1.01 times less risky than Wex. The stock trades about -0.25 of its potential returns per unit of risk. The Wex Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18,856  in Wex Inc on September 2, 2024 and sell it today you would earn a total of  10.00  from holding Wex Inc or generate 0.05% return on investment over 90 days.

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

PagSeguro Digital  vs.  Wex Inc

PagSeguro Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PagSeguro Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wex Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wex Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Wex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PagSeguro Digital and Wex

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

The idea behind PagSeguro Digital and Wex Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.