Correlation Between Everi Holdings and Arcos Dorados

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

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

Diversification Opportunities for Everi Holdings and Arcos Dorados

-0.9

Correlation Coefficient

Everi Holdings  Arcos Dorados

Pay attention - limited upside

The 3 months correlation between Everi and Arcos is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings 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 Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Everi Holdings i.e., Everi Holdings and Arcos Dorados go up and down completely randomly.

Pair Corralation between Everi Holdings and Arcos Dorados

Given the investment horizon of 90 days Everi Holdings is expected to generate 0.09 times more return on investment than Arcos Dorados. However, Everi Holdings is 10.59 times less risky than Arcos Dorados. It trades about 0.3 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.08 per unit of risk. If you would invest  1,350  in Everi Holdings on October 24, 2024 and sell it today you would earn a total of  10.00  from holding Everi Holdings or generate 0.74% return on investment over 90 days.

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

Everi Holdings  vs.  Arcos Dorados Holdings

Everi Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 15 (%) 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.

Arcos Dorados Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcos Dorados Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Everi Holdings and Arcos Dorados

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

The idea behind Everi Holdings and Arcos Dorados Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..