Correlation Between Evertec and Global Blue

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

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

Diversification Opportunities for Evertec and Global Blue

0.24

Correlation Coefficient

Evertec  Global Blue

Modest diversification

The 3 months correlation between Evertec and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Global Blue Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blue Group and Evertec 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 Evertec are associated (or correlated) with Global Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blue Group has no effect on the direction of Evertec i.e., Evertec and Global Blue go up and down completely randomly.

Pair Corralation between Evertec and Global Blue

Given the investment horizon of 90 days Evertec is expected to generate 1.05 times more return on investment than Global Blue. However, Evertec is 1.05 times more volatile than Global Blue Group. It trades about 0.03 of its potential returns per unit of risk. Global Blue Group is currently generating about 0.0 per unit of risk. If you would invest  3,206  in Evertec on January 13, 2025 and sell it today you would earn a total of  120.00  from holding Evertec or generate 3.74% return on investment over 90 days.

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

Evertec  vs.  Global Blue Group

Evertec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Blue Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Blue Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Global Blue is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evertec and Global Blue

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

The idea behind Evertec and Global Blue Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.