Correlation Between Genpact and Wex

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

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

Diversification Opportunities for Genpact and Wex

-0.5

Correlation Coefficient

Genpact  Wex

Very good diversification

The 3 months correlation between Genpact and Wex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc and Genpact 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 Genpact Limited are associated (or correlated) with Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of Genpact i.e., Genpact and Wex go up and down completely randomly.

Pair Corralation between Genpact and Wex

Taking into account the 90-day investment horizon Genpact is expected to generate 1.62 times less return on investment than Wex. But when comparing it to its historical volatility, Genpact Limited is 1.06 times less risky than Wex. It trades about 0.0 of its potential returns per unit of risk. Wex Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  18,337  in Wex Inc on September 27, 2024 and sell it today you would lose (1,170) from holding Wex Inc or give up 6.38% of portfolio value over 90 days.

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

Genpact Limited  vs.  Wex Inc

Genpact Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wex Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wex Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Genpact and Wex

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

The idea behind Genpact Limited and Wex Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.