Correlation Between Everi Holdings and Arcos Dorados

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

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

Diversification Opportunities for Everi Holdings and Arcos Dorados

0.65

Correlation Coefficient

Everi Holdings  Arcos Dorados

Poor diversification

The 3 months correlation between Everi and Arcos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings 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 Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Everi Holdings i.e., Everi Holdings and Arcos Dorados go up and down completely randomly.

Pair Corralation between Everi Holdings and Arcos Dorados

Given the investment horizon of 90 days Everi Holdings is expected to under-perform the Arcos Dorados. In addition to that, Everi Holdings is 1.46 times more volatile than Arcos Dorados Holdings. It trades about -0.09 of its total potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.08 per unit of volatility. If you would invest  1,112  in Arcos Dorados Holdings on January 20, 2024 and sell it today you would lose (36.00) from holding Arcos Dorados Holdings or give up 3.24% of portfolio value over 90 days.

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

Everi Holdings  vs.  Arcos Dorados Holdings

Everi Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Arcos Dorados Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcos Dorados Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Everi Holdings and Arcos Dorados

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

The idea behind Everi Holdings and Arcos Dorados Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.