Correlation Between Evergreen Corp and Granite Point

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

By analyzing existing cross correlation between Evergreen Corp and Granite Point Mortgage, you can compare the effects of market volatilities on Evergreen Corp and Granite Point 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 Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Corp and Granite Point.

Diversification Opportunities for Evergreen Corp and Granite Point

-0.08

Correlation Coefficient

Evergreen Corp  Granite Point

Good diversification

The 3 months correlation between Evergreen and Granite is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Corp and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage 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 Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of Evergreen Corp i.e., Evergreen Corp and Granite Point go up and down completely randomly.

Pair Corralation between Evergreen Corp and Granite Point

Given the investment horizon of 90 days Evergreen Corp is expected to generate 0.18 times more return on investment than Granite Point. However, Evergreen Corp is 5.66 times less risky than Granite Point. It trades about 0.1 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about -0.02 per unit of risk. If you would invest  1,190  in Evergreen Corp on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Evergreen Corp or generate 2.52% return on investment over 90 days.

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

Evergreen Corp  vs.  Granite Point Mortgage

Evergreen Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 7 (%) 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Granite Point Mortgage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granite Point Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Granite Point is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evergreen Corp and Granite Point

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

The idea behind Evergreen Corp and Granite Point Mortgage 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.