Correlation Between Inspired Entertainment and Everi Holdings

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

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

Diversification Opportunities for Inspired Entertainment and Everi Holdings

0.71

Correlation Coefficient

Inspired Entertainment  Everi Holdings

Poor diversification

The 3 months correlation between Inspired and Everi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and Everi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everi Holdings and Inspired Entertainment 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 Inspired Entertainment are associated (or correlated) with Everi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everi Holdings has no effect on the direction of Inspired Entertainment i.e., Inspired Entertainment and Everi Holdings go up and down completely randomly.

Pair Corralation between Inspired Entertainment and Everi Holdings

Given the investment horizon of 90 days Inspired Entertainment is expected to generate 12.05 times more return on investment than Everi Holdings. However, Inspired Entertainment is 12.05 times more volatile than Everi Holdings. It trades about 0.3 of its potential returns per unit of risk. Everi Holdings is currently generating about 0.33 per unit of risk. If you would invest  923.00  in Inspired Entertainment on August 11, 2024 and sell it today you would earn a total of  122.00  from holding Inspired Entertainment or generate 13.22% return on investment over 90 days.

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

Inspired Entertainment  vs.  Everi Holdings

Inspired Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Inspired Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Everi Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Inspired Entertainment and Everi Holdings

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

The idea behind Inspired Entertainment and Everi 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.