Correlation Between Quantum and Evolv Technologies

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

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

Diversification Opportunities for Quantum and Evolv Technologies

0.34

Correlation Coefficient

Quantum  Evolv Technologies

Weak diversification

The 3 months correlation between Quantum and Evolv is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Quantum 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 Quantum 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 Quantum i.e., Quantum and Evolv Technologies go up and down completely randomly.

Pair Corralation between Quantum and Evolv Technologies

Given the investment horizon of 90 days Quantum is expected to generate 5.45 times more return on investment than Evolv Technologies. However, Quantum is 5.45 times more volatile than Evolv Technologies Holdings. It trades about 0.07 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.09 per unit of risk. If you would invest  3,603  in Quantum on October 20, 2024 and sell it today you would lose (343.00) from holding Quantum or give up 9.52% of portfolio value over 90 days.

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

Quantum  vs.  Evolv Technologies Holdings

Quantum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Evolv Technologies

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Quantum and Evolv Technologies

The main advantage of trading using opposite Quantum and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum 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 Quantum 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.