Correlation Between Evolve European and Evolve Global

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Can any of the company-specific risk be diversified away by investing in both Evolve European and Evolve Global 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 European and Evolve Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolve European Banks and Evolve Global Healthcare, you can compare the effects of market volatilities on Evolve European and Evolve Global 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 European with a short position of Evolve Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve European and Evolve Global.

Diversification Opportunities for Evolve European and Evolve Global

EvolveEvolveDiversified AwayEvolveEvolveDiversified Away100%
0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Evolve and Evolve is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Evolve European Banks and Evolve Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Global Healthcare and Evolve European 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 European Banks are associated (or correlated) with Evolve Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Global Healthcare has no effect on the direction of Evolve European i.e., Evolve European and Evolve Global go up and down completely randomly.

Pair Corralation between Evolve European and Evolve Global

Assuming the 90 days trading horizon Evolve European Banks is expected to generate 1.85 times more return on investment than Evolve Global. However, Evolve European is 1.85 times more volatile than Evolve Global Healthcare. It trades about 0.1 of its potential returns per unit of risk. Evolve Global Healthcare is currently generating about 0.02 per unit of risk. If you would invest  804.00  in Evolve European Banks on November 20, 2024 and sell it today you would earn a total of  416.00  from holding Evolve European Banks or generate 51.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy85.44%
ValuesDaily Returns

Evolve European Banks  vs.  Evolve Global Healthcare

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -5051015
JavaScript chart by amCharts 3.21.15EBNK-B LIFE-U
       Timeline  
Evolve European Banks 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Evolve European Banks are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Evolve European sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1010.51111.512
Evolve Global Healthcare 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Evolve Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1919.219.419.619.82020.2

Evolve European and Evolve Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.97-2.97-1.97-0.98-0.01661.052.153.264.365.46 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15EBNK-B LIFE-U
       Returns  

Pair Trading with Evolve European and Evolve Global

The main advantage of trading using opposite Evolve European and Evolve Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve European position performs unexpectedly, Evolve Global 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 Global will offset losses from the drop in Evolve Global's long position.
The idea behind Evolve European Banks and Evolve Global Healthcare 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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