Correlation Between Evolve Global and IShares Core

Can any of the company-specific risk be diversified away by investing in both Evolve Global and IShares Core 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 IShares Core 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 iShares Core Equity, you can compare the effects of market volatilities on Evolve Global and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Global and IShares Core.

Diversification Opportunities for Evolve Global and IShares Core

0.55

Correlation Coefficient

Evolve Global  IShares Core

Very weak diversification

The 3 months correlation between Evolve and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Global Materials and iShares Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Equity 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Equity has no effect on the direction of Evolve Global i.e., Evolve Global and IShares Core go up and down completely randomly.

Pair Corralation between Evolve Global and IShares Core

Assuming the 90 days trading horizon Evolve Global Materials is expected to generate 1.21 times more return on investment than IShares Core. However, Evolve Global is 1.21 times more volatile than iShares Core Equity. It trades about 0.14 of its potential returns per unit of risk. iShares Core Equity is currently generating about 0.01 per unit of risk. If you would invest  2,118  in Evolve Global Materials on December 22, 2024 and sell it today you would earn a total of  171.00  from holding Evolve Global Materials or generate 8.07% return on investment over 90 days.

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

Evolve Global Materials  vs.  iShares Core Equity

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.

iShares Core Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Equity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolve Global and IShares Core

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

The idea behind Evolve Global Materials and iShares Core Equity 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 Transaction History module to view history of all your transactions and understand their impact on performance.