Correlation Between EPAM Systems and F5 Networks

Can any of the company-specific risk be diversified away by investing in both EPAM Systems and F5 Networks 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 EPAM Systems and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPAM Systems and F5 Networks, you can compare the effects of market volatilities on EPAM Systems and F5 Networks 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 EPAM Systems with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and F5 Networks.

Diversification Opportunities for EPAM Systems and F5 Networks

-0.35

Correlation Coefficient

EPAM Systems  F5 Networks

Very good diversification

The 3 months correlation between EPAM and FFIV is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and EPAM Systems 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 EPAM Systems are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of EPAM Systems i.e., EPAM Systems and F5 Networks go up and down completely randomly.

Pair Corralation between EPAM Systems and F5 Networks

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the F5 Networks. In addition to that, EPAM Systems is 1.18 times more volatile than F5 Networks. It trades about -0.02 of its total potential returns per unit of risk. F5 Networks is currently generating about 0.01 per unit of volatility. If you would invest  29,924  in F5 Networks on July 29, 2025 and sell it today you would lose (90.00) from holding F5 Networks or give up 0.3% of portfolio value over 90 days.

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

EPAM Systems  vs.  F5 Networks

EPAM Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EPAM Systems is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

F5 Networks

Risk-Adjusted Performance

Weakest

Over the last 90 days F5 Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, F5 Networks is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EPAM Systems and F5 Networks

The main advantage of trading using opposite EPAM Systems and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind EPAM Systems and F5 Networks 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.