Correlation Between Evolution Gaming and Unum

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

Diversification Opportunities for Evolution Gaming and Unum

0.49

Correlation Coefficient

Evolution Gaming  Unum

Very weak diversification

The 3 months correlation between Evolution and Unum is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Unum go up and down completely randomly.

Pair Corralation between Evolution Gaming and Unum

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the Unum. In addition to that, Evolution Gaming is 2.73 times more volatile than Unum Group. It trades about 0.0 of its total potential returns per unit of risk. Unum Group is currently generating about 0.06 per unit of volatility. If you would invest  2,440  in Unum Group on December 20, 2024 and sell it today you would earn a total of  71.00  from holding Unum Group or generate 2.91% return on investment over 90 days.

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

Evolution Gaming Group  vs.  Unum Group

Evolution Gaming

Risk-Adjusted Performance

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 fairly strong basic indicators, Evolution Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unum Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unum Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Unum is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolution Gaming and Unum

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

The idea behind Evolution Gaming Group and Unum Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.