Correlation Between Evergreen Corp and Global Partners

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

By analyzing existing cross correlation between Evergreen Corp and Global Partners LP, you can compare the effects of market volatilities on Evergreen Corp and Global Partners 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 Evergreen Corp with a short position of Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Corp and Global Partners.

Diversification Opportunities for Evergreen Corp and Global Partners

0.75

Correlation Coefficient

Evergreen Corp  Global Partners

Poor diversification

The 3 months correlation between Evergreen and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Corp and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Evergreen Corp 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 Evergreen Corp are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Evergreen Corp i.e., Evergreen Corp and Global Partners go up and down completely randomly.

Pair Corralation between Evergreen Corp and Global Partners

Given the investment horizon of 90 days Evergreen Corp is expected to generate 1.58 times less return on investment than Global Partners. But when comparing it to its historical volatility, Evergreen Corp is 2.3 times less risky than Global Partners. It trades about 0.24 of its potential returns per unit of risk. Global Partners LP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,552  in Global Partners LP on October 4, 2024 and sell it today you would earn a total of  62.00  from holding Global Partners LP or generate 2.43% return on investment over 90 days.

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

Evergreen Corp  vs.  Global Partners LP

Evergreen Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Evergreen Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Global Partners LP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evergreen Corp and Global Partners

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

The idea behind Evergreen Corp and Global Partners LP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.