Correlation Between Everi Holdings and Aptiv PLC

Can any of the company-specific risk be diversified away by investing in both Everi Holdings and Aptiv 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 Everi Holdings and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Everi Holdings and Aptiv PLC

0.87

Correlation Coefficient

Everi Holdings  Aptiv PLC

Very poor diversification

The 3 months correlation between Everi and Aptiv is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Everi Holdings 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 Everi Holdings are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Everi Holdings i.e., Everi Holdings and Aptiv PLC go up and down completely randomly.

Pair Corralation between Everi Holdings and Aptiv PLC

Given the investment horizon of 90 days Everi Holdings is expected to generate 4.44 times less return on investment than Aptiv PLC. But when comparing it to its historical volatility, Everi Holdings is 8.16 times less risky than Aptiv PLC. It trades about 0.08 of its potential returns per unit of risk. Aptiv PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,011  in Aptiv PLC on December 28, 2024 and sell it today you would earn a total of  214.00  from holding Aptiv PLC or generate 3.56% return on investment over 90 days.

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

Everi Holdings  vs.  Aptiv PLC

Everi Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Aptiv PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aptiv PLC is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Everi Holdings and Aptiv PLC

The main advantage of trading using opposite Everi Holdings and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings position performs unexpectedly, Aptiv 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.

The idea behind Everi Holdings and Aptiv PLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.