Correlation Between Cool and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both Cool 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 Cool and Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cool Company and Evolution Gaming Group, you can compare the effects of market volatilities on Cool 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 Cool with a short position of Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cool and Evolution Gaming.
Diversification Opportunities for Cool and Evolution Gaming
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cool and Evolution is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Cool 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 Cool Company 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 Cool i.e., Cool and Evolution Gaming go up and down completely randomly.
Pair Corralation between Cool and Evolution Gaming
Given the investment horizon of 90 days Cool Company is expected to generate 1.1 times more return on investment than Evolution Gaming. However, Cool is 1.1 times more volatile than Evolution Gaming Group. It trades about -0.02 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.04 per unit of risk. If you would invest 1,044 in Cool Company on November 9, 2024 and sell it today you would lose (302.00) from holding Cool Company or give up 28.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.35% |
| Values | Daily Returns |
Cool Company vs. Evolution Gaming Group
Performance |
| Timeline |
| Cool Company |
| Evolution Gaming |
Cool and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cool and Evolution Gaming
The main advantage of trading using opposite Cool and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cool 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.| Cool vs. Primoris Services | Cool vs. Tritent International Agriculture | Cool vs. Mattel Inc | Cool vs. Hurco Companies |
| Evolution Gaming vs. Galaxy Gaming | Evolution Gaming vs. Everi Holdings | Evolution Gaming vs. Intema Solutions | Evolution Gaming vs. 888 Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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