Correlation Between Wex and Fleetcor Technologies

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

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

Diversification Opportunities for Wex and Fleetcor Technologies

-0.04

Correlation Coefficient

Wex  Fleetcor Technologies

Good diversification

The 3 months correlation between Wex and Fleetcor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Fleetcor Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleetcor Technologies and Wex 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 Wex Inc are associated (or correlated) with Fleetcor Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleetcor Technologies has no effect on the direction of Wex i.e., Wex and Fleetcor Technologies go up and down completely randomly.

Pair Corralation between Wex and Fleetcor Technologies

Considering the 90-day investment horizon Wex is expected to generate 41.57 times less return on investment than Fleetcor Technologies. In addition to that, Wex is 1.05 times more volatile than Fleetcor Technologies. It trades about 0.0 of its total potential returns per unit of risk. Fleetcor Technologies is currently generating about 0.05 per unit of volatility. If you would invest  21,074  in Fleetcor Technologies on September 27, 2024 and sell it today you would earn a total of  5,719  from holding Fleetcor Technologies or generate 27.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.97%
Values	Daily Returns

Wex Inc  vs.  Fleetcor Technologies

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.

Fleetcor Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fleetcor Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Fleetcor Technologies is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wex and Fleetcor Technologies

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

The idea behind Wex Inc and Fleetcor Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.