Correlation Between Amdocs and Wex

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

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

Diversification Opportunities for Amdocs and Wex

-0.53

Correlation Coefficient

Amdocs  Wex

Excellent diversification

The 3 months correlation between Amdocs and Wex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and Amdocs 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 Amdocs 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 Amdocs i.e., Amdocs and Wex go up and down completely randomly.

Pair Corralation between Amdocs and Wex

Considering the 90-day investment horizon Amdocs is expected to generate 0.4 times more return on investment than Wex. However, Amdocs is 2.53 times less risky than Wex. It trades about 0.0 of its potential returns per unit of risk. Wex Inc is currently generating about -0.09 per unit of risk. If you would invest  8,398  in Amdocs on January 5, 2025 and sell it today you would lose (28.00) from holding Amdocs or give up 0.33% of portfolio value over 90 days.

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

Amdocs  vs.  Wex Inc

Amdocs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amdocs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Wex Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wex Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amdocs and Wex

The main advantage of trading using opposite Amdocs and Wex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amdocs 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 Amdocs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.