Correlation Between Evolve Banks and Global X

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

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

Diversification Opportunities for Evolve Banks and Global X

-0.46

Correlation Coefficient

Evolve Banks  Global X

Very good diversification

The 3 months correlation between Evolve and Global is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Banks Enhanced and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Evolve Banks 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 Banks Enhanced are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Active has no effect on the direction of Evolve Banks i.e., Evolve Banks and Global X go up and down completely randomly.

Pair Corralation between Evolve Banks and Global X

Assuming the 90 days trading horizon Evolve Banks Enhanced is expected to generate 4.26 times more return on investment than Global X. However, Evolve Banks is 4.26 times more volatile than Global X Active. It trades about 0.14 of its potential returns per unit of risk. Global X Active is currently generating about 0.1 per unit of risk. If you would invest  1,288  in Evolve Banks Enhanced on September 3, 2024 and sell it today you would earn a total of  190.00  from holding Evolve Banks Enhanced or generate 14.75% return on investment over 90 days.

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

Evolve Banks Enhanced  vs.  Global X Active

Evolve Banks Enhanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Banks Enhanced are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Banks displayed solid returns over the last few months and may actually be approaching a breakup point.

Global X Active

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X 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 Banks and Global X

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

The idea behind Evolve Banks Enhanced and Global X Active 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..