Correlation Between EPAM Systems and Fiserv

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

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

Diversification Opportunities for EPAM Systems and Fiserv

-0.31

Correlation Coefficient

EPAM Systems  Fiserv

Very good diversification

The 3 months correlation between EPAM and Fiserv is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and EPAM Systems 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 EPAM Systems are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of EPAM Systems i.e., EPAM Systems and Fiserv go up and down completely randomly.

Pair Corralation between EPAM Systems and Fiserv

If you would invest  24,694  in EPAM Systems on February 6, 2024 and sell it today you would lose (114.00) from holding EPAM Systems or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.81%
Values	Daily Returns

EPAM Systems  vs.  Fiserv Inc

EPAM Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fiserv Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiserv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fiserv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EPAM Systems and Fiserv

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

The idea behind EPAM Systems and Fiserv Inc 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.