Correlation Between Euronet Worldwide and Exponent
Can any of the company-specific risk be diversified away by investing in both Euronet Worldwide and Exponent 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 Euronet Worldwide and Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronet Worldwide and Exponent, you can compare the effects of market volatilities on Euronet Worldwide and Exponent 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 Euronet Worldwide with a short position of Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronet Worldwide and Exponent.
Diversification Opportunities for Euronet Worldwide and Exponent
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Euronet and Exponent is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Euronet Worldwide 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 Euronet Worldwide are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Euronet Worldwide i.e., Euronet Worldwide and Exponent go up and down completely randomly.
Pair Corralation between Euronet Worldwide and Exponent
Given the investment horizon of 90 days Euronet Worldwide is expected to generate 0.7 times more return on investment than Exponent. However, Euronet Worldwide is 1.42 times less risky than Exponent. It trades about 0.01 of its potential returns per unit of risk. Exponent is currently generating about -0.08 per unit of risk. If you would invest 10,116 in Euronet Worldwide on January 20, 2024 and sell it today you would earn a total of 65.00 from holding Euronet Worldwide or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euronet Worldwide vs. Exponent
Performance |
| Timeline |
| Euronet Worldwide |
| Exponent |
Euronet Worldwide and Exponent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronet Worldwide and Exponent
The main advantage of trading using opposite Euronet Worldwide and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronet Worldwide position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.| Euronet Worldwide vs. Palo Alto Networks | Euronet Worldwide vs. Zscaler | Euronet Worldwide vs. Cloudflare | Euronet Worldwide vs. Okta Inc |
| Exponent vs. Genpact Limited | Exponent vs. ExlService Holdings | Exponent vs. Science Applications International | Exponent vs. WNS Holdings |
Check out your portfolio center.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.
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