Correlation Between Evertec and Squarespace

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

By analyzing existing cross correlation between Evertec and Squarespace, you can compare the effects of market volatilities on Evertec and Squarespace 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 Squarespace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and Squarespace.

Diversification Opportunities for Evertec and Squarespace

0.01

Correlation Coefficient

Evertec  Squarespace

Significant diversification

The 3 months correlation between Evertec and Squarespace is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Squarespace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Squarespace 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 Squarespace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Squarespace has no effect on the direction of Evertec i.e., Evertec and Squarespace go up and down completely randomly.

Pair Corralation between Evertec and Squarespace

Given the investment horizon of 90 days Evertec is expected to generate 8.06 times less return on investment than Squarespace. But when comparing it to its historical volatility, Evertec is 1.34 times less risky than Squarespace. It trades about 0.01 of its potential returns per unit of risk. Squarespace is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Squarespace on June 24, 2024 and sell it today you would earn a total of  2,440  from holding Squarespace or generate 110.91% return on investment over 90 days.

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

Evertec  vs.  Squarespace

Evertec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Squarespace

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Squarespace are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Squarespace is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Evertec and Squarespace

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

The idea behind Evertec and Squarespace 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.