Correlation Between Vanguard and Evolve Global

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

By analyzing existing cross correlation between Vanguard SP 500 and Evolve Global Materials, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of Evolve Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Evolve Global.

Diversification Opportunities for Vanguard and Evolve Global

-0.16

Correlation Coefficient

Vanguard  Evolve Global

Good diversification

The 3 months correlation between Vanguard and Evolve is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 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 Vanguard 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 Vanguard SP 500 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 Vanguard i.e., Vanguard and Evolve Global go up and down completely randomly.

Pair Corralation between Vanguard and Evolve Global

Assuming the 90 days trading horizon Vanguard SP 500 is expected to under-perform the Evolve Global. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard SP 500 is 1.02 times less risky than Evolve Global. The etf trades about -0.09 of its potential returns per unit of risk. The Evolve Global Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,118  in Evolve Global Materials on December 23, 2024 and sell it today you would earn a total of  171.00  from holding Evolve Global Materials or generate 8.07% return on investment over 90 days.

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

Vanguard SP 500  vs.  Evolve Global Materials

Vanguard SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard 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 Vanguard and Evolve Global

The main advantage of trading using opposite Vanguard and Evolve Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 Vanguard SP 500 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.