Correlation Between Evolution Gaming and Caffyns PLC
Can any of the company-specific risk be diversified away by investing in both Evolution Gaming and Caffyns PLC 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 Evolution Gaming and Caffyns PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Gaming Group and Caffyns PLC, you can compare the effects of market volatilities on Evolution Gaming and Caffyns PLC 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 Evolution Gaming with a short position of Caffyns PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Gaming and Caffyns PLC.
Diversification Opportunities for Evolution Gaming and Caffyns PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Evolution and Caffyns is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Caffyns PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caffyns PLC and Evolution Gaming 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 Evolution Gaming Group are associated (or correlated) with Caffyns PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caffyns PLC has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Caffyns PLC go up and down completely randomly.
Pair Corralation between Evolution Gaming and Caffyns PLC
Assuming the 90 days trading horizon Evolution Gaming Group is expected to under-perform the Caffyns PLC. In addition to that, Evolution Gaming is 1.47 times more volatile than Caffyns PLC. It trades about -0.06 of its total potential returns per unit of risk. Caffyns PLC is currently generating about -0.05 per unit of volatility. If you would invest 49,457 in Caffyns PLC on September 1, 2024 and sell it today you would lose (4,457) from holding Caffyns PLC or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Evolution Gaming Group vs. Caffyns PLC
Performance |
| Timeline |
| Evolution Gaming |
| Caffyns PLC |
Evolution Gaming and Caffyns PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Gaming and Caffyns PLC
The main advantage of trading using opposite Evolution Gaming and Caffyns PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming position performs unexpectedly, Caffyns PLC 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 Caffyns PLC will offset losses from the drop in Caffyns PLC's long position.| Evolution Gaming vs. Uniper SE | Evolution Gaming vs. Mulberry Group PLC | Evolution Gaming vs. London Security Plc | Evolution Gaming vs. Triad Group PLC |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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