Correlation Between EVO Payments and Black Knight

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

Diversification Opportunities for EVO Payments and Black Knight

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between EVO and Black is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding EVO Payments and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight and EVO Payments 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 EVO Payments are associated (or correlated) with Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of EVO Payments i.e., EVO Payments and Black Knight go up and down completely randomly.

Pair Corralation between EVO Payments and Black Knight

Given the investment horizon of 90 days EVO Payments is expected to generate 1.15 times more return on investment than Black Knight. However, EVO Payments is 1.15 times more volatile than Black Knight. It trades about 0.1 of its potential returns per unit of risk. Black Knight is currently generating about 0.03 per unit of risk. If you would invest  2,209  in EVO Payments on December 30, 2023 and sell it today you would earn a total of  1,190  from holding EVO Payments or generate 53.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy68.47%
ValuesDaily Returns

EVO Payments  vs.  Black Knight

 Performance 
       Timeline  
EVO Payments 

Risk-Adjusted Performance

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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 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
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 and Black Knight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EVO Payments and Black Knight

The main advantage of trading using opposite EVO Payments and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVO Payments position performs unexpectedly, Black Knight 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 Black Knight will offset losses from the drop in Black Knight's long position.
The idea behind EVO Payments and Black Knight 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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