Correlation Between EVgo Equity and Resources Connection

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

By analyzing existing cross correlation between EVgo Equity Warrants and Resources Connection, you can compare the effects of market volatilities on EVgo Equity and Resources Connection 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 EVgo Equity with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVgo Equity and Resources Connection.

Diversification Opportunities for EVgo Equity and Resources Connection

0.36

Correlation Coefficient

EVgo Equity  Resources Connection

Weak diversification

The 3 months correlation between EVgo and Resources is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding EVgo Equity Warrants and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and EVgo Equity 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 EVgo Equity Warrants are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of EVgo Equity i.e., EVgo Equity and Resources Connection go up and down completely randomly.

Pair Corralation between EVgo Equity and Resources Connection

Assuming the 90 days horizon EVgo Equity Warrants is expected to generate 6.07 times more return on investment than Resources Connection. However, EVgo Equity is 6.07 times more volatile than Resources Connection. It trades about 0.03 of its potential returns per unit of risk. Resources Connection is currently generating about -0.07 per unit of risk. If you would invest  70.00  in EVgo Equity Warrants on November 29, 2024 and sell it today you would lose (42.00) from holding EVgo Equity Warrants or give up 60.0% of portfolio value over 90 days.

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

EVgo Equity Warrants  vs.  Resources Connection

EVgo Equity Warrants

Risk-Adjusted Performance

Very Weak

Over the last 90 days EVgo Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Resources Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with EVgo Equity and Resources Connection

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

The idea behind EVgo Equity Warrants and Resources Connection 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.