Correlation Between Evolv Technologies and Ciena Corp

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

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

Diversification Opportunities for Evolv Technologies and Ciena Corp

0.18

Correlation Coefficient

Evolv Technologies  Ciena Corp

Average diversification

The 3 months correlation between Evolv and Ciena is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Evolv Technologies 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 Evolv Technologies Holdings are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and Ciena Corp go up and down completely randomly.

Pair Corralation between Evolv Technologies and Ciena Corp

Given the investment horizon of 90 days Evolv Technologies Holdings is expected to under-perform the Ciena Corp. But the stock apears to be less risky and, when comparing its historical volatility, Evolv Technologies Holdings is 1.09 times less risky than Ciena Corp. The stock trades about -0.24 of its potential returns per unit of risk. The Ciena Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,005  in Ciena Corp on November 29, 2024 and sell it today you would earn a total of  72.00  from holding Ciena Corp or generate 0.9% return on investment over 90 days.

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

Evolv Technologies Holdings  vs.  Ciena Corp

Evolv Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolv Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ciena Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ciena Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Ciena Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolv Technologies and Ciena Corp

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

The idea behind Evolv Technologies Holdings and Ciena Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.