Correlation Between INC Research and Evolus

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

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

Diversification Opportunities for INC Research and Evolus

0.13

Correlation Coefficient

INC Research  Evolus

Average diversification

The 3 months correlation between INC and Evolus is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding INC Research Holdings and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc and INC Research 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 INC Research Holdings are associated (or correlated) with Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of INC Research i.e., INC Research and Evolus go up and down completely randomly.

Pair Corralation between INC Research and Evolus

Given the investment horizon of 90 days INC Research Holdings is expected to under-perform the Evolus. But the stock apears to be less risky and, when comparing its historical volatility, INC Research Holdings is 2.12 times less risky than Evolus. The stock trades about -0.08 of its potential returns per unit of risk. The Evolus Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,109  in Evolus Inc on December 27, 2024 and sell it today you would earn a total of  115.00  from holding Evolus Inc or generate 10.37% return on investment over 90 days.

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

INC Research Holdings  vs.  Evolus Inc

INC Research Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Evolus Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolus Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Evolus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INC Research and Evolus

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

The idea behind INC Research Holdings and Evolus 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.