Correlation Between Evolution Gaming and Entravision Communications

Can any of the company-specific risk be diversified away by investing in both Evolution Gaming and Entravision Communications 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 Entravision Communications 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 Entravision Communications, you can compare the effects of market volatilities on Evolution Gaming and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Gaming and Entravision Communications.

Diversification Opportunities for Evolution Gaming and Entravision Communications

-0.24

Correlation Coefficient

Evolution Gaming  Entravision Communications

Very good diversification

The 3 months correlation between Evolution and Entravision is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Entravision Communications go up and down completely randomly.

Pair Corralation between Evolution Gaming and Entravision Communications

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the Entravision Communications. But the pink sheet apears to be less risky and, when comparing its historical volatility, Evolution Gaming Group is 2.3 times less risky than Entravision Communications. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Entravision Communications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Entravision Communications on October 26, 2024 and sell it today you would earn a total of  5.00  from holding Entravision Communications or generate 2.24% return on investment over 90 days.

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

Evolution Gaming Group  vs.  Entravision Communications

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.

Entravision Communications

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Evolution Gaming and Entravision Communications

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

The idea behind Evolution Gaming Group and Entravision Communications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..