Correlation Between Evolution Gaming and Cracker Barrel

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

By analyzing existing cross correlation between Evolution Gaming Group and Cracker Barrel Old, you can compare the effects of market volatilities on Evolution Gaming and Cracker Barrel 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 Evolution Gaming with a short position of Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Gaming and Cracker Barrel.

Diversification Opportunities for Evolution Gaming and Cracker Barrel

-0.69

Correlation Coefficient

Evolution Gaming  Cracker Barrel

Excellent diversification

The 3 months correlation between Evolution and Cracker is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old and Evolution Gaming 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 Evolution Gaming Group are associated (or correlated) with Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Cracker Barrel go up and down completely randomly.

Pair Corralation between Evolution Gaming and Cracker Barrel

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 0.77 times more return on investment than Cracker Barrel. However, Evolution Gaming Group is 1.3 times less risky than Cracker Barrel. It trades about -0.02 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.03 per unit of risk. If you would invest  10,365  in Evolution Gaming Group on October 7, 2024 and sell it today you would lose (2,454) from holding Evolution Gaming Group or give up 23.68% of portfolio value over 90 days.

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

Evolution Gaming Group  vs.  Cracker Barrel Old

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cracker Barrel Old

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and Cracker Barrel

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

The idea behind Evolution Gaming Group and Cracker Barrel Old 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.