Correlation Between Evolus and Benchmark Botanics

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

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

Diversification Opportunities for Evolus and Benchmark Botanics

-0.19

Correlation Coefficient

Evolus  Benchmark Botanics

Good diversification

The 3 months correlation between Evolus and Benchmark is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Benchmark Botanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Botanics and Evolus 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 Evolus Inc are associated (or correlated) with Benchmark Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Botanics has no effect on the direction of Evolus i.e., Evolus and Benchmark Botanics go up and down completely randomly.

Pair Corralation between Evolus and Benchmark Botanics

Given the investment horizon of 90 days Evolus Inc is expected to generate 0.37 times more return on investment than Benchmark Botanics. However, Evolus Inc is 2.74 times less risky than Benchmark Botanics. It trades about 0.05 of its potential returns per unit of risk. Benchmark Botanics is currently generating about -0.13 per unit of risk. If you would invest  1,351  in Evolus Inc on December 1, 2024 and sell it today you would earn a total of  108.00  from holding Evolus Inc or generate 7.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Evolus Inc  vs.  Benchmark Botanics

Evolus Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolus Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Evolus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Benchmark Botanics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Evolus and Benchmark Botanics

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

The idea behind Evolus Inc and Benchmark Botanics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.