Correlation Between Floor Decor and Evgo

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

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

Diversification Opportunities for Floor Decor and Evgo

0.57

Correlation Coefficient

Floor Decor  Evgo

Very weak diversification

The 3 months correlation between Floor and Evgo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and Evgo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evgo Inc and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with Evgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evgo Inc has no effect on the direction of Floor Decor i.e., Floor Decor and Evgo go up and down completely randomly.

Pair Corralation between Floor Decor and Evgo

Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 0.6 times more return on investment than Evgo. However, Floor Decor Holdings is 1.66 times less risky than Evgo. It trades about -0.12 of its potential returns per unit of risk. Evgo Inc is currently generating about -0.16 per unit of risk. If you would invest  9,990  in Floor Decor Holdings on December 27, 2024 and sell it today you would lose (1,647) from holding Floor Decor Holdings or give up 16.49% of portfolio value over 90 days.

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

Floor Decor Holdings  vs.  Evgo Inc

Floor Decor Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Floor Decor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Evgo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evgo Inc 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 technical and fundamental 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 Floor Decor and Evgo

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

The idea behind Floor Decor Holdings and Evgo Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.