Correlation Between First Responder and Evolv Technologies

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

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

Diversification Opportunities for First Responder and Evolv Technologies

-0.39

Correlation Coefficient

First Responder  Evolv Technologies

Very good diversification

The 3 months correlation between First and Evolv is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Responder Technologies and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and First Responder 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 First Responder Technologies 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 First Responder i.e., First Responder and Evolv Technologies go up and down completely randomly.

Pair Corralation between First Responder and Evolv Technologies

Assuming the 90 days horizon First Responder Technologies is expected to generate 39.93 times more return on investment than Evolv Technologies. However, First Responder is 39.93 times more volatile than Evolv Technologies Holdings. It trades about 0.21 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.08 per unit of risk. If you would invest  2.10  in First Responder Technologies on December 28, 2024 and sell it today you would earn a total of  97.90  from holding First Responder Technologies or generate 4661.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

First Responder Technologies  vs.  Evolv Technologies Holdings

First Responder Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Responder Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, First Responder reported solid returns over the last few months and may actually be approaching a breakup point.

Evolv Technologies

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with First Responder and Evolv Technologies

The main advantage of trading using opposite First Responder and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Responder 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 First Responder Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.