Correlation Between TD Active and Evolve Global

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

By analyzing existing cross correlation between TD Active Global and Evolve Global Materials, you can compare the effects of market volatilities on TD Active and Evolve Global 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 TD Active with a short position of Evolve Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Active and Evolve Global.

Diversification Opportunities for TD Active and Evolve Global

-0.21

Correlation Coefficient

TD Active  Evolve Global

Very good diversification

The 3 months correlation between TGED and Evolve is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding TD Active Global and Evolve Global Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Global Materials and TD Active 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 TD Active Global are associated (or correlated) with Evolve Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Global Materials has no effect on the direction of TD Active i.e., TD Active and Evolve Global go up and down completely randomly.

Pair Corralation between TD Active and Evolve Global

Assuming the 90 days trading horizon TD Active Global is expected to under-perform the Evolve Global. In addition to that, TD Active is 1.16 times more volatile than Evolve Global Materials. It trades about -0.09 of its total potential returns per unit of risk. Evolve Global Materials is currently generating about 0.13 per unit of volatility. If you would invest  2,093  in Evolve Global Materials on December 30, 2024 and sell it today you would earn a total of  165.00  from holding Evolve Global Materials or generate 7.88% return on investment over 90 days.

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

TD Active Global  vs.  Evolve Global Materials

TD Active Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Active Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TD Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve Global Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TD Active and Evolve Global

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

The idea behind TD Active Global and Evolve Global Materials 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.

Check out your portfolio center.

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.