Correlation Between Exponent and Evertec

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

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

Diversification Opportunities for Exponent and Evertec

0.47

Correlation Coefficient

Exponent  Evertec

Very weak diversification

The 3 months correlation between Exponent and Evertec is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Exponent 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 Exponent are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Exponent i.e., Exponent and Evertec go up and down completely randomly.

Pair Corralation between Exponent and Evertec

Given the investment horizon of 90 days Exponent is expected to under-perform the Evertec. But the stock apears to be less risky and, when comparing its historical volatility, Exponent is 1.28 times less risky than Evertec. The stock trades about -0.1 of its potential returns per unit of risk. The Evertec is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,771  in Evertec on May 21, 2025 and sell it today you would lose (61.00) from holding Evertec or give up 1.62% of portfolio value over 90 days.

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

Exponent  vs.  Evertec

Exponent

Risk-Adjusted Performance

Weakest

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Evertec

Risk-Adjusted Performance

Weakest

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Exponent and Evertec

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

The idea behind Exponent and Evertec 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.