Correlation Between CAVA Group, and Evolution Gaming

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

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

Diversification Opportunities for CAVA Group, and Evolution Gaming

0.26

Correlation Coefficient

CAVA Group,  Evolution Gaming

Modest diversification

The 3 months correlation between CAVA and Evolution is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and CAVA Group, 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 CAVA Group, 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 CAVA Group, i.e., CAVA Group, and Evolution Gaming go up and down completely randomly.

Pair Corralation between CAVA Group, and Evolution Gaming

Given the investment horizon of 90 days CAVA Group, is expected to generate 1.46 times more return on investment than Evolution Gaming. However, CAVA Group, is 1.46 times more volatile than Evolution Gaming Group. It trades about 0.06 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.1 per unit of risk. If you would invest  9,527  in CAVA Group, on September 29, 2024 and sell it today you would earn a total of  1,910  from holding CAVA Group, or generate 20.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CAVA Group,  vs.  Evolution Gaming Group

CAVA Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVA Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CAVA Group, and Evolution Gaming

The main advantage of trading using opposite CAVA Group, and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, 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 CAVA Group, 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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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.