Correlation Between Evolve Cyber and GLOBAL X

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

Diversification Opportunities for Evolve Cyber and GLOBAL X

0.79

Correlation Coefficient

Evolve Cyber  GLOBAL X

Poor diversification

The 3 months correlation between Evolve and GLOBAL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Cyber Security and GLOBAL X HIGH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBAL X HIGH and Evolve Cyber 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 Cyber Security 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 HIGH has no effect on the direction of Evolve Cyber i.e., Evolve Cyber and GLOBAL X go up and down completely randomly.

Pair Corralation between Evolve Cyber and GLOBAL X

Assuming the 90 days trading horizon Evolve Cyber Security is expected to generate 26.02 times more return on investment than GLOBAL X. However, Evolve Cyber is 26.02 times more volatile than GLOBAL X HIGH. It trades about 0.1 of its potential returns per unit of risk. GLOBAL X HIGH is currently generating about 0.32 per unit of risk. If you would invest  3,477  in Evolve Cyber Security on October 4, 2024 and sell it today you would earn a total of  2,682  from holding Evolve Cyber Security or generate 77.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.01%
Values	Daily Returns

Evolve Cyber Security  vs.  GLOBAL X HIGH

Evolve Cyber Security

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Evolve Cyber may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GLOBAL X HIGH

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBAL X HIGH are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Evolve Cyber and GLOBAL X

The main advantage of trading using opposite Evolve Cyber and GLOBAL X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Cyber 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 Cyber Security and GLOBAL X HIGH 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.