Correlation Between EVO Payments and Employers Holdings
Can any of the company-specific risk be diversified away by investing in both EVO Payments and Employers Holdings 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 EVO Payments and Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVO Payments and Employers Holdings, you can compare the effects of market volatilities on EVO Payments and Employers Holdings 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 EVO Payments with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVO Payments and Employers Holdings.
Diversification Opportunities for EVO Payments and Employers Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between EVO and Employers is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding EVO Payments and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and EVO Payments 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 EVO Payments are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of EVO Payments i.e., EVO Payments and Employers Holdings go up and down completely randomly.
Pair Corralation between EVO Payments and Employers Holdings
Given the investment horizon of 90 days EVO Payments is expected to generate 6.99 times less return on investment than Employers Holdings. But when comparing it to its historical volatility, EVO Payments is 14.43 times less risky than Employers Holdings. It trades about 0.09 of its potential returns per unit of risk. Employers Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,166 in Employers Holdings on August 25, 2024 and sell it today you would earn a total of 1,159 from holding Employers Holdings or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 15.52% |
| Values | Daily Returns |
EVO Payments vs. Employers Holdings
Performance |
| Timeline |
| EVO Payments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Employers Holdings |
EVO Payments and Employers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVO Payments and Employers Holdings
The main advantage of trading using opposite EVO Payments and Employers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVO Payments position performs unexpectedly, Employers Holdings 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 Employers Holdings will offset losses from the drop in Employers Holdings' long position.| EVO Payments vs. Employers Holdings | EVO Payments vs. ICC Holdings | EVO Payments vs. The Hanover Insurance | EVO Payments vs. Assurant |
| Employers Holdings vs. Investors Title | Employers Holdings vs. AMERISAFE | Employers Holdings vs. Essent Group | Employers Holdings vs. ICC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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