Correlation Between Euronet Worldwide and Endava

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

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

Diversification Opportunities for Euronet Worldwide and Endava

-0.24

Correlation Coefficient

Euronet Worldwide  Endava

Very good diversification

The 3 months correlation between Euronet and Endava is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Endava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endava 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 Endava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endava has no effect on the direction of Euronet Worldwide i.e., Euronet Worldwide and Endava go up and down completely randomly.

Pair Corralation between Euronet Worldwide and Endava

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 0.79 times more return on investment than Endava. However, Euronet Worldwide is 1.27 times less risky than Endava. It trades about -0.17 of its potential returns per unit of risk. Endava is currently generating about -0.56 per unit of risk. If you would invest  10,868  in Euronet Worldwide on February 1, 2024 and sell it today you would lose (600.00) from holding Euronet Worldwide or give up 5.52% 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.  Endava

Euronet Worldwide

Risk-Adjusted Performance

0 of 100

Insignificant

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

Endava

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endava has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Euronet Worldwide and Endava

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

The idea behind Euronet Worldwide and Endava 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.