Correlation Between Everi Holdings and Ark Restaurants

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

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

Diversification Opportunities for Everi Holdings and Ark Restaurants

-0.22

Correlation Coefficient

Everi Holdings  Ark Restaurants

Very good diversification

The 3 months correlation between Everi and Ark is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Everi Holdings i.e., Everi Holdings and Ark Restaurants go up and down completely randomly.

Pair Corralation between Everi Holdings and Ark Restaurants

Given the investment horizon of 90 days Everi Holdings is expected to generate 5.81 times less return on investment than Ark Restaurants. But when comparing it to its historical volatility, Everi Holdings is 25.22 times less risky than Ark Restaurants. It trades about 0.25 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,166  in Ark Restaurants Corp on September 12, 2024 and sell it today you would earn a total of  132.69  from holding Ark Restaurants Corp or generate 11.38% return on investment over 90 days.

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

Everi Holdings  vs.  Ark Restaurants Corp

Everi Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 19 (%) 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.

Ark Restaurants Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everi Holdings and Ark Restaurants

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

The idea behind Everi Holdings and Ark Restaurants Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.