Correlation Between Global X and Evolve Banks

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

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

Diversification Opportunities for Global X and Evolve Banks

-0.32

Correlation Coefficient

Global X  Evolve Banks

Very good diversification

The 3 months correlation between Global and Evolve is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global X Semiconductor and Evolve Banks Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Banks Enhanced and Global X 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 Global X Semiconductor are associated (or correlated) with Evolve Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Banks Enhanced has no effect on the direction of Global X i.e., Global X and Evolve Banks go up and down completely randomly.

Pair Corralation between Global X and Evolve Banks

Assuming the 90 days trading horizon Global X is expected to generate 1.33 times less return on investment than Evolve Banks. In addition to that, Global X is 1.54 times more volatile than Evolve Banks Enhanced. It trades about 0.05 of its total potential returns per unit of risk. Evolve Banks Enhanced is currently generating about 0.11 per unit of volatility. If you would invest  1,025  in Evolve Banks Enhanced on September 13, 2024 and sell it today you would earn a total of  391.00  from holding Evolve Banks Enhanced or generate 38.15% return on investment over 90 days.

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

Global X Semiconductor  vs.  Evolve Banks Enhanced

Global X Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve Banks Enhanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Banks Enhanced are ranked lower than 13 (%) 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.

Pair Trading with Global X and Evolve Banks

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

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