Correlation Between CAP LEASE and Evolution Gaming

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

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

Diversification Opportunities for CAP LEASE and Evolution Gaming

0.56

Correlation Coefficient

CAP LEASE  Evolution Gaming

Very weak diversification

The 3 months correlation between CAP and Evolution is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Evolution Gaming go up and down completely randomly.

Pair Corralation between CAP LEASE and Evolution Gaming

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Evolution Gaming. In addition to that, CAP LEASE is 2.23 times more volatile than Evolution Gaming Group. It trades about -0.09 of its total potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.1 per unit of volatility. If you would invest  85,430  in Evolution Gaming Group on December 31, 2024 and sell it today you would lose (10,030) from holding Evolution Gaming Group or give up 11.74% of portfolio value over 90 days.

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

CAP LEASE AVIATION  vs.  Evolution Gaming Group

CAP LEASE AVIATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Evolution Gaming

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CAP LEASE and Evolution Gaming

The main advantage of trading using opposite CAP LEASE and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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 CAP LEASE AVIATION 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.