Correlation Between Euronet Worldwide and BlackBerry

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

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

Diversification Opportunities for Euronet Worldwide and BlackBerry

-0.38

Correlation Coefficient

Euronet Worldwide  BlackBerry

Very good diversification

The 3 months correlation between Euronet and BlackBerry is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry and Euronet Worldwide 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 Euronet Worldwide are associated (or correlated) with BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Euronet Worldwide i.e., Euronet Worldwide and BlackBerry go up and down completely randomly.

Pair Corralation between Euronet Worldwide and BlackBerry

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 0.61 times more return on investment than BlackBerry. However, Euronet Worldwide is 1.63 times less risky than BlackBerry. It trades about 0.0 of its potential returns per unit of risk. BlackBerry is currently generating about -0.02 per unit of risk. If you would invest  12,349  in Euronet Worldwide on January 24, 2024 and sell it today you would lose (1,960) from holding Euronet Worldwide or give up 15.87% of portfolio value over 90 days.

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

Euronet Worldwide  vs.  BlackBerry

Euronet Worldwide

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Euronet Worldwide may actually be approaching a critical reversion point that can send shares even higher in May 2024.

BlackBerry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BlackBerry is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Euronet Worldwide and BlackBerry

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

The idea behind Euronet Worldwide and BlackBerry 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 Valuation module to check real value of public entities based on technical and fundamental data.