Correlation Between Gen Digital and EVO Payments

Can any of the company-specific risk be diversified away by investing in both Gen Digital and EVO Payments 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 Gen Digital and EVO Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gen Digital and EVO Payments, you can compare the effects of market volatilities on Gen Digital and EVO Payments 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 Gen Digital with a short position of EVO Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gen Digital and EVO Payments.

Diversification Opportunities for Gen Digital and EVO Payments

-0.57

Correlation Coefficient

Gen Digital  EVO Payments

Excellent diversification

The 3 months correlation between Gen and EVO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and EVO Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVO Payments and Gen Digital 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 Gen Digital are associated (or correlated) with EVO Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVO Payments has no effect on the direction of Gen Digital i.e., Gen Digital and EVO Payments go up and down completely randomly.

Pair Corralation between Gen Digital and EVO Payments

If you would invest  1,631  in Gen Digital on January 25, 2024 and sell it today you would earn a total of  452.00  from holding Gen Digital or generate 27.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.81%
Values	Daily Returns

Gen Digital  vs.  EVO Payments

Gen Digital

Risk-Adjusted Performance

0 of 100

Very Weak

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

EVO Payments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVO Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EVO Payments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gen Digital and EVO Payments

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

The idea behind Gen Digital and EVO Payments 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.