Correlation Between Everi Holdings and BT Brands

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

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

Diversification Opportunities for Everi Holdings and BT Brands

0.23

Correlation Coefficient

Everi Holdings  BT Brands

Modest diversification

The 3 months correlation between Everi and BTBDW is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and BT Brands Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Brands Warrant 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 BT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Brands Warrant has no effect on the direction of Everi Holdings i.e., Everi Holdings and BT Brands go up and down completely randomly.

Pair Corralation between Everi Holdings and BT Brands

Given the investment horizon of 90 days Everi Holdings is expected to generate 277.17 times less return on investment than BT Brands. But when comparing it to its historical volatility, Everi Holdings is 207.82 times less risky than BT Brands. It trades about 0.09 of its potential returns per unit of risk. BT Brands Warrant is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7.93  in BT Brands Warrant on December 19, 2024 and sell it today you would lose (3.81) from holding BT Brands Warrant or give up 48.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	45.0%
Values	Daily Returns

Everi Holdings  vs.  BT Brands Warrant

Everi Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 7 (%) 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

BT Brands Warrant

Risk-Adjusted Performance

OK

Over the last 90 days BT Brands Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady fundamental indicators, BT Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everi Holdings and BT Brands

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

The idea behind Everi Holdings and BT Brands Warrant 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.