Correlation Between Evolve Cyber and IShares ESG

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

Diversification Opportunities for Evolve Cyber and IShares ESG

0.97

Correlation Coefficient

Evolve Cyber  IShares ESG

Almost no diversification

The 3 months correlation between Evolve and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Cyber Security and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of Evolve Cyber i.e., Evolve Cyber and IShares ESG go up and down completely randomly.

Pair Corralation between Evolve Cyber and IShares ESG

Assuming the 90 days trading horizon Evolve Cyber Security is expected to generate 1.69 times more return on investment than IShares ESG. However, Evolve Cyber is 1.69 times more volatile than iShares ESG Advanced. It trades about 0.11 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.14 per unit of risk. If you would invest  4,206  in Evolve Cyber Security on September 12, 2024 and sell it today you would earn a total of  2,054  from holding Evolve Cyber Security or generate 48.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	75.45%
Values	Daily Returns

Evolve Cyber Security  vs.  iShares ESG Advanced

Evolve Cyber Security

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Evolve Cyber sustained solid returns over the last few months and may actually be approaching a breakup point.

iShares ESG Advanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Advanced are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Evolve Cyber and IShares ESG

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

The idea behind Evolve Cyber Security and iShares ESG Advanced 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.