Correlation Between CbdMD and Evolus

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

By analyzing existing cross correlation between cbdMD Inc and Evolus Inc, you can compare the effects of market volatilities on CbdMD and Evolus 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 CbdMD with a short position of Evolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of CbdMD and Evolus.

Diversification Opportunities for CbdMD and Evolus

0.05

Correlation Coefficient

CbdMD  Evolus

Significant diversification

The 3 months correlation between CbdMD and Evolus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc and CbdMD 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 cbdMD Inc are associated (or correlated) with Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of CbdMD i.e., CbdMD and Evolus go up and down completely randomly.

Pair Corralation between CbdMD and Evolus

Given the investment horizon of 90 days cbdMD Inc is expected to under-perform the Evolus. In addition to that, CbdMD is 1.91 times more volatile than Evolus Inc. It trades about -0.04 of its total potential returns per unit of risk. Evolus Inc is currently generating about 0.06 per unit of volatility. If you would invest  1,089  in Evolus Inc on December 28, 2024 and sell it today you would earn a total of  116.00  from holding Evolus Inc or generate 10.65% return on investment over 90 days.

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

cbdMD Inc  vs.  Evolus Inc

cbdMD Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days cbdMD Inc 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 fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Evolus Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolus Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Evolus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CbdMD and Evolus

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

The idea behind cbdMD Inc and Evolus Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.