Correlation Between Super Micro and Evolv Technologies

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

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

Diversification Opportunities for Super Micro and Evolv Technologies

0.78

Correlation Coefficient

Super Micro  Evolv Technologies

Poor diversification

The 3 months correlation between Super and Evolv is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Super Micro 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 Super Micro Computer 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 Super Micro i.e., Super Micro and Evolv Technologies go up and down completely randomly.

Pair Corralation between Super Micro and Evolv Technologies

Given the investment horizon of 90 days Super Micro is expected to generate 1.16 times less return on investment than Evolv Technologies. But when comparing it to its historical volatility, Super Micro Computer is 1.29 times less risky than Evolv Technologies. It trades about 0.01 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Evolv Technologies Holdings on September 14, 2024 and sell it today you would lose (16.01) from holding Evolv Technologies Holdings or give up 33.35% of portfolio value over 90 days.

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

Super Micro Computer  vs.  Evolv Technologies Holdings

Super Micro Computer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Super Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 fairly uncertain basic indicators, Evolv Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Super Micro and Evolv Technologies

The main advantage of trading using opposite Super Micro and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro 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 Super Micro Computer 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.