Correlation Between Evoke Pharma and Allovir

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

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

Diversification Opportunities for Evoke Pharma and Allovir

0.2

Correlation Coefficient

Evoke Pharma  Allovir

Modest diversification

The 3 months correlation between Evoke and Allovir is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and Allovir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allovir and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with Allovir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allovir has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and Allovir go up and down completely randomly.

Pair Corralation between Evoke Pharma and Allovir

Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the Allovir. In addition to that, Evoke Pharma is 1.15 times more volatile than Allovir. It trades about -0.13 of its total potential returns per unit of risk. Allovir is currently generating about 0.04 per unit of volatility. If you would invest  929.00  in Allovir on December 20, 2024 and sell it today you would earn a total of  52.00  from holding Allovir or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Evoke Pharma  vs.  Allovir

Evoke Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evoke Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Allovir

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allovir are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Allovir may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Evoke Pharma and Allovir

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

The idea behind Evoke Pharma and Allovir 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.