Correlation Between L3Harris Technologies and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Evolution Gaming 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 L3Harris Technologies and Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Evolution Gaming Group, you can compare the effects of market volatilities on L3Harris Technologies and Evolution Gaming 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 L3Harris Technologies with a short position of Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Evolution Gaming.
Diversification Opportunities for L3Harris Technologies and Evolution Gaming
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between L3Harris and Evolution is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Evolution Gaming go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Evolution Gaming
Assuming the 90 days trading horizon L3Harris Technologies is expected to generate 0.4 times more return on investment than Evolution Gaming. However, L3Harris Technologies is 2.51 times less risky than Evolution Gaming. It trades about 0.1 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.13 per unit of risk. If you would invest 21,240 in L3Harris Technologies on October 20, 2024 and sell it today you would earn a total of 483.00 from holding L3Harris Technologies or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
L3Harris Technologies vs. Evolution Gaming Group
Performance |
| Timeline |
| L3Harris Technologies |
| Evolution Gaming |
L3Harris Technologies and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Evolution Gaming
The main advantage of trading using opposite L3Harris Technologies and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.The idea behind L3Harris Technologies and Evolution Gaming Group 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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