Correlation Between Spotify Technology and Evolution Gaming

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

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

Diversification Opportunities for Spotify Technology and Evolution Gaming

-0.15

Correlation Coefficient

Spotify Technology  Evolution Gaming

Good diversification

The 3 months correlation between Spotify and Evolution is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Evolution Gaming go up and down completely randomly.

Pair Corralation between Spotify Technology and Evolution Gaming

Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 0.76 times more return on investment than Evolution Gaming. However, Spotify Technology SA is 1.31 times less risky than Evolution Gaming. It trades about 0.1 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  52,010  in Spotify Technology SA on April 20, 2025 and sell it today you would earn a total of  7,740  from holding Spotify Technology SA or generate 14.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Spotify Technology SA  vs.  Evolution Gaming Group

Spotify Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution Gaming

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Gaming Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evolution Gaming may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Spotify Technology and Evolution Gaming

The main advantage of trading using opposite Spotify Technology and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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 Spotify Technology SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.