Correlation Between Evolv Technologies and Landsea Homes

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

Diversification Opportunities for Evolv Technologies and Landsea Homes

0.59

Correlation Coefficient

Evolv Technologies  Landsea Homes

Very weak diversification

The 3 months correlation between Evolv and Landsea is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and Landsea Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes 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 Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and Landsea Homes go up and down completely randomly.

Pair Corralation between Evolv Technologies and Landsea Homes

Assuming the 90 days horizon Evolv Technologies Holdings is expected to under-perform the Landsea Homes. But the stock apears to be less risky and, when comparing its historical volatility, Evolv Technologies Holdings is 1.16 times less risky than Landsea Homes. The stock trades about -0.02 of its potential returns per unit of risk. The Landsea Homes is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Landsea Homes on December 28, 2024 and sell it today you would lose (3.88) from holding Landsea Homes or give up 35.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Evolv Technologies Holdings  vs.  Landsea Homes

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.

Landsea Homes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landsea Homes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Landsea Homes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Evolv Technologies and Landsea Homes

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

The idea behind Evolv Technologies Holdings and Landsea Homes 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.