Correlation Between Evolve Global and Guardian

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

By analyzing existing cross correlation between Evolve Global Materials and Guardian i3 Global, you can compare the effects of market volatilities on Evolve Global and Guardian 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 Evolve Global with a short position of Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Global and Guardian.

Diversification Opportunities for Evolve Global and Guardian

-0.06

Correlation Coefficient

Evolve Global  Guardian

Good diversification

The 3 months correlation between Evolve and Guardian is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Global Materials and Guardian i3 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Global and Evolve Global 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 Evolve Global Materials are associated (or correlated) with Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Global has no effect on the direction of Evolve Global i.e., Evolve Global and Guardian go up and down completely randomly.

Pair Corralation between Evolve Global and Guardian

Assuming the 90 days trading horizon Evolve Global Materials is expected to generate 0.76 times more return on investment than Guardian. However, Evolve Global Materials is 1.32 times less risky than Guardian. It trades about 0.14 of its potential returns per unit of risk. Guardian i3 Global is currently generating about -0.12 per unit of risk. If you would invest  2,116  in Evolve Global Materials on December 24, 2024 and sell it today you would earn a total of  173.00  from holding Evolve Global Materials or generate 8.18% return on investment over 90 days.

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

Evolve Global Materials  vs.  Guardian i3 Global

Evolve Global Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guardian i3 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian i3 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Evolve Global and Guardian

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

The idea behind Evolve Global Materials and Guardian i3 Global 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.

Check out your portfolio center.

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.