Correlation Between Core Main and EVI Industries

Can any of the company-specific risk be diversified away by investing in both Core Main and EVI Industries 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 Core Main and EVI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Main and EVI Industries, you can compare the effects of market volatilities on Core Main and EVI Industries 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 Core Main with a short position of EVI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and EVI Industries.

Diversification Opportunities for Core Main and EVI Industries

0.42

Correlation Coefficient

Core Main  EVI Industries

Very weak diversification

The 3 months correlation between Core and EVI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and EVI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVI Industries and Core Main 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 Core Main are associated (or correlated) with EVI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVI Industries has no effect on the direction of Core Main i.e., Core Main and EVI Industries go up and down completely randomly.

Pair Corralation between Core Main and EVI Industries

Considering the 90-day investment horizon Core Main is expected to generate 4.52 times less return on investment than EVI Industries. But when comparing it to its historical volatility, Core Main is 1.17 times less risky than EVI Industries. It trades about 0.03 of its potential returns per unit of risk. EVI Industries is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,522  in EVI Industries on September 2, 2024 and sell it today you would earn a total of  442.00  from holding EVI Industries or generate 29.04% return on investment over 90 days.

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

Core Main  vs.  EVI Industries

Core Main

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Core Main are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Core Main may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EVI Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVI Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, EVI Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core Main and EVI Industries

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

The idea behind Core Main and EVI Industries 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 CEOs Directory module to screen CEOs from public companies around the world.