Correlation Between IShares SPTSX and Evolve Global

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

By analyzing existing cross correlation between iShares SPTSX 60 and Evolve Global Healthcare, you can compare the effects of market volatilities on IShares SPTSX 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 IShares SPTSX with a short position of Evolve Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Evolve Global.

Diversification Opportunities for IShares SPTSX and Evolve Global

0.76

Correlation Coefficient

IShares SPTSX  Evolve Global

Poor diversification

The 3 months correlation between IShares and Evolve is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and Evolve Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Global Healthcare and IShares SPTSX 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 iShares SPTSX 60 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 Healthcare has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Evolve Global go up and down completely randomly.

Pair Corralation between IShares SPTSX and Evolve Global

Assuming the 90 days trading horizon IShares SPTSX is expected to generate 2.51 times less return on investment than Evolve Global. But when comparing it to its historical volatility, iShares SPTSX 60 is 1.1 times less risky than Evolve Global. It trades about 0.07 of its potential returns per unit of risk. Evolve Global Healthcare is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,005  in Evolve Global Healthcare on December 3, 2024 and sell it today you would earn a total of  42.00  from holding Evolve Global Healthcare or generate 2.09% return on investment over 90 days.

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

iShares SPTSX 60  vs.  Evolve Global Healthcare

iShares SPTSX 60

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SPTSX 60 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve Global Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Evolve Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares SPTSX and Evolve Global

The main advantage of trading using opposite IShares SPTSX and Evolve Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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 iShares SPTSX 60 and Evolve Global Healthcare 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.