Correlation Between Evolv Technologies and CompoSecure

Can any of the company-specific risk be diversified away by investing in both Evolv Technologies and CompoSecure 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 CompoSecure 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 CompoSecure, you can compare the effects of market volatilities on Evolv Technologies and CompoSecure 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 CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolv Technologies and CompoSecure.

Diversification Opportunities for Evolv Technologies and CompoSecure

0.68

Correlation Coefficient

Evolv Technologies  CompoSecure

Poor diversification

The 3 months correlation between Evolv and CompoSecure is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and CompoSecure go up and down completely randomly.

Pair Corralation between Evolv Technologies and CompoSecure

Assuming the 90 days horizon Evolv Technologies Holdings is expected to under-perform the CompoSecure. In addition to that, Evolv Technologies is 3.61 times more volatile than CompoSecure. It trades about -0.02 of its total potential returns per unit of risk. CompoSecure is currently generating about -0.07 per unit of volatility. If you would invest  1,300  in CompoSecure on December 29, 2024 and sell it today you would lose (206.00) from holding CompoSecure or give up 15.85% of portfolio value over 90 days.

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

Evolv Technologies Holdings  vs.  CompoSecure

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CompoSecure

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompoSecure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Evolv Technologies and CompoSecure

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

The idea behind Evolv Technologies Holdings and CompoSecure 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.