Correlation Between Black Knight and EVO Payments

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Can any of the company-specific risk be diversified away by investing in both Black Knight 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 Black Knight and EVO Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Knight and EVO Payments, you can compare the effects of market volatilities on Black Knight 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 Black Knight with a short position of EVO Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Knight and EVO Payments.

Diversification Opportunities for Black Knight and EVO Payments

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Black and EVO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and EVO Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVO Payments and Black Knight 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 Black Knight 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 Black Knight i.e., Black Knight and EVO Payments go up and down completely randomly.

Pair Corralation between Black Knight and EVO Payments

Considering the 90-day investment horizon Black Knight is expected to generate 14.06 times more return on investment than EVO Payments. However, Black Knight is 14.06 times more volatile than EVO Payments. It trades about 0.04 of its potential returns per unit of risk. EVO Payments is currently generating about 0.12 per unit of risk. If you would invest  6,552  in Black Knight on December 19, 2023 and sell it today you would earn a total of  1,024  from holding Black Knight or generate 15.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy53.16%
ValuesDaily Returns

Black Knight  vs.  EVO Payments

 Performance 
       Timeline  
Black Knight 

Risk-Adjusted Performance

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Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
EVO Payments 

Risk-Adjusted Performance

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Low
 
High
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.

Black Knight and EVO Payments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Black Knight and EVO Payments

The main advantage of trading using opposite Black Knight and EVO Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Knight 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 Black Knight 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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