Correlation Between Global X and Evolve Canadian

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

By analyzing existing cross correlation between Global X Seasonal and Evolve Canadian Banks, you can compare the effects of market volatilities on Global X and Evolve Canadian 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 Global X with a short position of Evolve Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Evolve Canadian.

Diversification Opportunities for Global X and Evolve Canadian

0.85

Correlation Coefficient

Global X  Evolve Canadian

Very poor diversification

The 3 months correlation between Global and Evolve is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global X Seasonal and Evolve Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Canadian Banks and Global X 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 Global X Seasonal are associated (or correlated) with Evolve Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Canadian Banks has no effect on the direction of Global X i.e., Global X and Evolve Canadian go up and down completely randomly.

Pair Corralation between Global X and Evolve Canadian

Assuming the 90 days trading horizon Global X is expected to generate 3.7 times less return on investment than Evolve Canadian. But when comparing it to its historical volatility, Global X Seasonal is 1.01 times less risky than Evolve Canadian. It trades about 0.11 of its potential returns per unit of risk. Evolve Canadian Banks is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  725.00  in Evolve Canadian Banks on September 4, 2024 and sell it today you would earn a total of  108.00  from holding Evolve Canadian Banks or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Global X Seasonal  vs.  Evolve Canadian Banks

Global X Seasonal

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Seasonal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve Canadian Banks

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Banks are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Evolve Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Evolve Canadian

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

The idea behind Global X Seasonal and Evolve Canadian Banks 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.