Correlation Between Evolve Automobile and Global X

Can any of the company-specific risk be diversified away by investing in both Evolve Automobile 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 Automobile 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 Automobile Innovation and Global X Industry, you can compare the effects of market volatilities on Evolve Automobile 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 Automobile with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Automobile and Global X.

Diversification Opportunities for Evolve Automobile and Global X

0.41

Correlation Coefficient

Evolve Automobile  Global X

Very weak diversification

The 3 months correlation between Evolve and Global is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Automobile Innovation and Global X Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Industry and Evolve Automobile 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 Automobile Innovation 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 Industry has no effect on the direction of Evolve Automobile i.e., Evolve Automobile and Global X go up and down completely randomly.

Pair Corralation between Evolve Automobile and Global X

Assuming the 90 days trading horizon Evolve Automobile is expected to generate 1.88 times less return on investment than Global X. In addition to that, Evolve Automobile is 1.27 times more volatile than Global X Industry. It trades about 0.1 of its total potential returns per unit of risk. Global X Industry is currently generating about 0.23 per unit of volatility. If you would invest  4,643  in Global X Industry on September 4, 2024 and sell it today you would earn a total of  953.00  from holding Global X Industry or generate 20.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Evolve Automobile Innovation  vs.  Global X Industry

Evolve Automobile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Automobile Innovation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Automobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Industry

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Industry are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolve Automobile and Global X

The main advantage of trading using opposite Evolve Automobile and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Automobile 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 Automobile Innovation and Global X Industry 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.