Correlation Between Evolve Automobile and IShares High

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

Diversification Opportunities for Evolve Automobile and IShares High

-0.41

Correlation Coefficient

Evolve Automobile  IShares High

Very good diversification

The 3 months correlation between Evolve and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Automobile Innovation and iShares High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Dividend 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 IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Dividend has no effect on the direction of Evolve Automobile i.e., Evolve Automobile and IShares High go up and down completely randomly.

Pair Corralation between Evolve Automobile and IShares High

Assuming the 90 days trading horizon Evolve Automobile Innovation is expected to generate 1.8 times more return on investment than IShares High. However, Evolve Automobile is 1.8 times more volatile than iShares High Dividend. It trades about 0.06 of its potential returns per unit of risk. iShares High Dividend is currently generating about -0.06 per unit of risk. If you would invest  2,013  in Evolve Automobile Innovation on October 23, 2024 and sell it today you would earn a total of  116.00  from holding Evolve Automobile Innovation or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Evolve Automobile Innovation  vs.  iShares High Dividend

Evolve Automobile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Automobile Innovation are ranked lower than 4 (%) 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 February 2025.

iShares High Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares High Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares High 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 Automobile and IShares High

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

The idea behind Evolve Automobile Innovation and iShares High Dividend 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.