Correlation Between Liberty Defense and Evolv Technologies

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

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

Diversification Opportunities for Liberty Defense and Evolv Technologies

-0.09

Correlation Coefficient

Liberty Defense  Evolv Technologies

Good diversification

The 3 months correlation between Liberty and Evolv is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Defense Holdings and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Liberty Defense 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 Liberty Defense Holdings are associated (or correlated) with Evolv Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolv Technologies has no effect on the direction of Liberty Defense i.e., Liberty Defense and Evolv Technologies go up and down completely randomly.

Pair Corralation between Liberty Defense and Evolv Technologies

Assuming the 90 days horizon Liberty Defense Holdings is expected to generate 1.98 times more return on investment than Evolv Technologies. However, Liberty Defense is 1.98 times more volatile than Evolv Technologies Holdings. It trades about 0.19 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.02 per unit of risk. If you would invest  50.00  in Liberty Defense Holdings on December 2, 2024 and sell it today you would earn a total of  62.00  from holding Liberty Defense Holdings or generate 124.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Liberty Defense Holdings  vs.  Evolv Technologies Holdings

Liberty Defense Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Defense Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Liberty Defense reported solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable essential indicators, Evolv Technologies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Liberty Defense and Evolv Technologies

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

The idea behind Liberty Defense Holdings and Evolv Technologies Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.