Correlation Between Evolve Global and Evolve European

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Can any of the company-specific risk be diversified away by investing in both Evolve Global and Evolve European 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 Evolve Global and Evolve European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolve Global Healthcare and Evolve European Banks, you can compare the effects of market volatilities on Evolve Global and Evolve European 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 Evolve Global with a short position of Evolve European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Global and Evolve European.

Diversification Opportunities for Evolve Global and Evolve European

EvolveEvolveDiversified AwayEvolveEvolveDiversified Away100%
0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Evolve and Evolve is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Global Healthcare and Evolve European Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve European Banks and Evolve Global 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 Evolve Global Healthcare are associated (or correlated) with Evolve European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve European Banks has no effect on the direction of Evolve Global i.e., Evolve Global and Evolve European go up and down completely randomly.

Pair Corralation between Evolve Global and Evolve European

Assuming the 90 days trading horizon Evolve Global is expected to generate 4.68 times less return on investment than Evolve European. But when comparing it to its historical volatility, Evolve Global Healthcare is 1.49 times less risky than Evolve European. It trades about 0.08 of its potential returns per unit of risk. Evolve European Banks is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Evolve European Banks on November 24, 2024 and sell it today you would earn a total of  232.00  from holding Evolve European Banks or generate 22.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Evolve Global Healthcare  vs.  Evolve European Banks

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -5051015
JavaScript chart by amCharts 3.21.15LIFE-U EBNK-B
       Timeline  
Evolve Global Healthcare 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Evolve Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1919.219.419.619.82020.220.4
Evolve European Banks 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Evolve European Banks are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Evolve European sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1010.51111.51212.5

Evolve Global and Evolve European Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.68-2.01-1.33-0.660.00.671.372.072.763.46 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15LIFE-U EBNK-B
       Returns  

Pair Trading with Evolve Global and Evolve European

The main advantage of trading using opposite Evolve Global and Evolve European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Global position performs unexpectedly, Evolve European 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 European will offset losses from the drop in Evolve European's long position.
The idea behind Evolve Global Healthcare and Evolve European 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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