Correlation Between Equifax and Verisk Analytics

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

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

Diversification Opportunities for Equifax and Verisk Analytics

0.47

Correlation Coefficient

Equifax  Verisk Analytics

Very weak diversification

The 3 months correlation between Equifax and Verisk is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics and Equifax 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 Equifax 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 Equifax i.e., Equifax and Verisk Analytics go up and down completely randomly.

Pair Corralation between Equifax and Verisk Analytics

Considering the 90-day investment horizon Equifax is expected to under-perform the Verisk Analytics. In addition to that, Equifax is 3.47 times more volatile than Verisk Analytics. It trades about -0.3 of its total potential returns per unit of risk. Verisk Analytics is currently generating about -0.31 per unit of volatility. If you would invest  23,278  in Verisk Analytics on January 31, 2024 and sell it today you would lose (1,093) from holding Verisk Analytics or give up 4.7% of portfolio value over 90 days.

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

Equifax  vs.  Verisk Analytics

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Verisk Analytics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Equifax and Verisk Analytics

The main advantage of trading using opposite Equifax and Verisk Analytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax 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 Equifax 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.