Correlation Between Everi Holdings and Golden Entertainment

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

Diversification Opportunities for Everi Holdings and Golden Entertainment

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Everi and Golden is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and Everi Holdings 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 Everi Holdings are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Everi Holdings i.e., Everi Holdings and Golden Entertainment go up and down completely randomly.

Pair Corralation between Everi Holdings and Golden Entertainment

Given the investment horizon of 90 days Everi Holdings is expected to under-perform the Golden Entertainment. In addition to that, Everi Holdings is 1.12 times more volatile than Golden Entertainment. It trades about -0.07 of its total potential returns per unit of risk. Golden Entertainment is currently generating about 0.04 per unit of volatility. If you would invest  3,317  in Golden Entertainment on December 29, 2023 and sell it today you would earn a total of  333.50  from holding Golden Entertainment or generate 10.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.19%
ValuesDaily Returns

Everi Holdings  vs.  Golden Entertainment

 Performance 
       Timeline  
Everi Holdings 

Risk-Adjusted Performance

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Over the last 90 days Everi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Golden Entertainment 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Golden Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Everi Holdings and Golden Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Everi Holdings and Golden Entertainment

The main advantage of trading using opposite Everi Holdings and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.
The idea behind Everi Holdings and Golden Entertainment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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