Correlation Between Brightcove and Evertec

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

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

Diversification Opportunities for Brightcove and Evertec

-0.62

Correlation Coefficient

Brightcove  Evertec

Excellent diversification

The 3 months correlation between Brightcove and Evertec is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Brightcove and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Brightcove 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 Brightcove 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 Brightcove i.e., Brightcove and Evertec go up and down completely randomly.

Pair Corralation between Brightcove and Evertec

Given the investment horizon of 90 days Brightcove is expected to under-perform the Evertec. In addition to that, Brightcove is 1.86 times more volatile than Evertec. It trades about -0.08 of its total potential returns per unit of risk. Evertec is currently generating about -0.01 per unit of volatility. If you would invest  3,624  in Evertec on March 16, 2024 and sell it today you would lose (343.00) from holding Evertec or give up 9.46% of portfolio value over 90 days.

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

Brightcove  vs.  Evertec

Brightcove

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brightcove are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Brightcove may actually be approaching a critical reversion point that can send shares even higher in July 2024.

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Brightcove and Evertec

The main advantage of trading using opposite Brightcove and Evertec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightcove 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 Brightcove 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.