Correlation Between Everest and OFS Capital

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

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

Diversification Opportunities for Everest and OFS Capital

-0.27

Correlation Coefficient

Everest  OFS Capital

Very good diversification

The 3 months correlation between Everest and OFS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp and Everest 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 Everest Group are associated (or correlated) with OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of Everest i.e., Everest and OFS Capital go up and down completely randomly.

Pair Corralation between Everest and OFS Capital

Allowing for the 90-day total investment horizon Everest Group is expected to under-perform the OFS Capital. But the stock apears to be less risky and, when comparing its historical volatility, Everest Group is 1.17 times less risky than OFS Capital. The stock trades about -0.05 of its potential returns per unit of risk. The OFS Capital Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  814.00  in OFS Capital Corp on May 4, 2025 and sell it today you would earn a total of  16.00  from holding OFS Capital Corp or generate 1.97% return on investment over 90 days.

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

Everest Group  vs.  OFS Capital Corp

Everest Group

Risk-Adjusted Performance

Very Weak

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

OFS Capital Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Capital Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, OFS Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Everest and OFS Capital

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

The idea behind Everest Group and OFS Capital Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.