Correlation Between Everi Holdings and Frontdoor

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

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

Diversification Opportunities for Everi Holdings and Frontdoor

0.84

Correlation Coefficient

Everi Holdings  Frontdoor

Very poor diversification

The 3 months correlation between Everi and Frontdoor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Frontdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontdoor 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 Frontdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontdoor has no effect on the direction of Everi Holdings i.e., Everi Holdings and Frontdoor go up and down completely randomly.

Pair Corralation between Everi Holdings and Frontdoor

Given the investment horizon of 90 days Everi Holdings is expected to generate 12.5 times less return on investment than Frontdoor. But when comparing it to its historical volatility, Everi Holdings is 12.49 times less risky than Frontdoor. It trades about 0.22 of its potential returns per unit of risk. Frontdoor is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  5,157  in Frontdoor on August 31, 2024 and sell it today you would earn a total of  660.00  from holding Frontdoor or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Everi Holdings  vs.  Frontdoor

Everi Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 21 (%) 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.

Frontdoor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Frontdoor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Frontdoor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everi Holdings and Frontdoor

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

The idea behind Everi Holdings and Frontdoor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.