Correlation Between Paysafe and Vestis

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

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

Diversification Opportunities for Paysafe and Vestis

0.22

Correlation Coefficient

Paysafe  Vestis

Modest diversification

The 3 months correlation between Paysafe and Vestis is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and Paysafe 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 Paysafe are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Paysafe i.e., Paysafe and Vestis go up and down completely randomly.

Pair Corralation between Paysafe and Vestis

Given the investment horizon of 90 days Paysafe is expected to under-perform the Vestis. In addition to that, Paysafe is 3.26 times more volatile than Vestis. It trades about -0.16 of its total potential returns per unit of risk. Vestis is currently generating about -0.27 per unit of volatility. If you would invest  1,505  in Vestis on August 20, 2024 and sell it today you would lose (158.00) from holding Vestis or give up 10.5% of portfolio value over 90 days.

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

Paysafe  vs.  Vestis

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe 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 rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vestis

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vestis is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Paysafe and Vestis

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

The idea behind Paysafe and Vestis 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.