Correlation Between Dream Finders and Evolution Gaming

Can any of the company-specific risk be diversified away by investing in both Dream Finders and Evolution Gaming 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 Dream Finders and Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dream Finders Homes and Evolution Gaming Group, you can compare the effects of market volatilities on Dream Finders and Evolution Gaming 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 Dream Finders with a short position of Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Finders and Evolution Gaming.

Diversification Opportunities for Dream Finders and Evolution Gaming

0.57

Correlation Coefficient

Dream Finders  Evolution Gaming

Very weak diversification

The 3 months correlation between Dream and Evolution is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dream Finders Homes and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Dream Finders 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 Dream Finders Homes are associated (or correlated) with Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Dream Finders i.e., Dream Finders and Evolution Gaming go up and down completely randomly.

Pair Corralation between Dream Finders and Evolution Gaming

Considering the 90-day investment horizon Dream Finders Homes is expected to generate 1.76 times more return on investment than Evolution Gaming. However, Dream Finders is 1.76 times more volatile than Evolution Gaming Group. It trades about 0.0 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.05 per unit of risk. If you would invest  3,463  in Dream Finders Homes on September 14, 2024 and sell it today you would lose (594.00) from holding Dream Finders Homes or give up 17.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Dream Finders Homes  vs.  Evolution Gaming Group

Dream Finders Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Finders Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dream Finders and Evolution Gaming

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

The idea behind Dream Finders Homes and Evolution Gaming Group 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..