Correlation Between Daily Journal and EVO Payments

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

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

Diversification Opportunities for Daily Journal and EVO Payments

0.45

Correlation Coefficient

Daily Journal  EVO Payments

Very weak diversification

The 3 months correlation between Daily and EVO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and EVO Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVO Payments and Daily Journal 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 Daily Journal Corp 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 Daily Journal i.e., Daily Journal and EVO Payments go up and down completely randomly.

Pair Corralation between Daily Journal and EVO Payments

Given the investment horizon of 90 days Daily Journal is expected to generate 2.01 times less return on investment than EVO Payments. In addition to that, Daily Journal is 1.05 times more volatile than EVO Payments. It trades about 0.05 of its total potential returns per unit of risk. EVO Payments is currently generating about 0.1 per unit of volatility. If you would invest  2,308  in EVO Payments on February 6, 2024 and sell it today you would earn a total of  1,091  from holding EVO Payments or generate 47.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.64%
Values	Daily Returns

Daily Journal Corp  vs.  EVO Payments

Daily Journal Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Daily Journal and EVO Payments

The main advantage of trading using opposite Daily Journal and EVO Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daily Journal 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 Daily Journal Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..