Correlation Between CAVA Group, and Playtika Holding

Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Playtika Holding 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 CAVA Group, and Playtika Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CAVA Group, and Playtika Holding

0.77

Correlation Coefficient

CAVA Group,  Playtika Holding

Poor diversification

The 3 months correlation between CAVA and Playtika is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and CAVA Group, 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 CAVA Group, are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of CAVA Group, i.e., CAVA Group, and Playtika Holding go up and down completely randomly.

Pair Corralation between CAVA Group, and Playtika Holding

Given the investment horizon of 90 days CAVA Group, is expected to generate 1.33 times more return on investment than Playtika Holding. However, CAVA Group, is 1.33 times more volatile than Playtika Holding Corp. It trades about 0.17 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.18 per unit of risk. If you would invest  11,671  in CAVA Group, on September 5, 2024 and sell it today you would earn a total of  2,513  from holding CAVA Group, or generate 21.53% return on investment over 90 days.

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

CAVA Group,  vs.  Playtika Holding Corp

CAVA Group,

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, CAVA Group, sustained solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAVA Group, and Playtika Holding

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

The idea behind CAVA Group, and Playtika Holding Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.