Correlation Between Evolution Gaming and NYSE Composite

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

Diversification Opportunities for Evolution Gaming and NYSE Composite

  Correlation Coefficient

Almost no diversification

The 3 months correlation between Evolution and NYSE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and NYSE Composite go up and down completely randomly.

Pair Corralation between Evolution Gaming and NYSE Composite

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 2.59 times more return on investment than NYSE Composite. However, Evolution Gaming is 2.59 times more volatile than NYSE Composite. It trades about 0.03 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.02 per unit of risk. If you would invest  9,762  in Evolution Gaming Group on November 24, 2023 and sell it today you would earn a total of  3,119  from holding Evolution Gaming Group or generate 31.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

Evolution Gaming Group  vs.  NYSE Composite


Evolution Gaming and NYSE Composite Volatility Contrast

   Predicted Return Density   

Pair Trading with Evolution Gaming and NYSE Composite

The main advantage of trading using opposite Evolution Gaming and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.
The idea behind Evolution Gaming Group and NYSE Composite 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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