Correlation Between SIGNA Sports and EVgo Equity

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

By analyzing existing cross correlation between SIGNA Sports United and EVgo Equity Warrants, you can compare the effects of market volatilities on SIGNA Sports and EVgo Equity 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 SIGNA Sports with a short position of EVgo Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIGNA Sports and EVgo Equity.

Diversification Opportunities for SIGNA Sports and EVgo Equity

-0.15

Correlation Coefficient

SIGNA Sports  EVgo Equity

Good diversification

The 3 months correlation between SIGNA and EVgo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SIGNA Sports United and EVgo Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVgo Equity Warrants and SIGNA Sports 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 SIGNA Sports United are associated (or correlated) with EVgo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVgo Equity Warrants has no effect on the direction of SIGNA Sports i.e., SIGNA Sports and EVgo Equity go up and down completely randomly.

Pair Corralation between SIGNA Sports and EVgo Equity

Considering the 90-day investment horizon SIGNA Sports United is expected to under-perform the EVgo Equity. But the stock apears to be less risky and, when comparing its historical volatility, SIGNA Sports United is 2.2 times less risky than EVgo Equity. The stock trades about -0.05 of its potential returns per unit of risk. The EVgo Equity Warrants is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  61.00  in EVgo Equity Warrants on September 27, 2024 and sell it today you would earn a total of  5.40  from holding EVgo Equity Warrants or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	27.57%
Values	Daily Returns

SIGNA Sports United  vs.  EVgo Equity Warrants

SIGNA Sports United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIGNA Sports United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SIGNA Sports is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

EVgo Equity Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVgo Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EVgo Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIGNA Sports and EVgo Equity

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

The idea behind SIGNA Sports United and EVgo Equity Warrants 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.