Correlation Between Evolve Cyber and Global X

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

By analyzing existing cross correlation between Evolve Cyber Security and Global X NASDAQ 100, you can compare the effects of market volatilities on Evolve Cyber and Global X 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 Evolve Cyber with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Cyber and Global X.

Diversification Opportunities for Evolve Cyber and Global X

0.93

Correlation Coefficient

Evolve Cyber  Global X

Almost no diversification

The 3 months correlation between Evolve and Global is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Cyber Security and Global X NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and Evolve Cyber 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 Evolve Cyber Security are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X NASDAQ has no effect on the direction of Evolve Cyber i.e., Evolve Cyber and Global X go up and down completely randomly.

Pair Corralation between Evolve Cyber and Global X

Assuming the 90 days trading horizon Evolve Cyber is expected to generate 1.03 times less return on investment than Global X. In addition to that, Evolve Cyber is 1.42 times more volatile than Global X NASDAQ 100. It trades about 0.11 of its total potential returns per unit of risk. Global X NASDAQ 100 is currently generating about 0.15 per unit of volatility. If you would invest  4,129  in Global X NASDAQ 100 on September 18, 2024 and sell it today you would earn a total of  4,881  from holding Global X NASDAQ 100 or generate 118.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	81.05%
Values	Daily Returns

Evolve Cyber Security  vs.  Global X NASDAQ 100

Evolve Cyber Security

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Evolve Cyber sustained solid returns over the last few months and may actually be approaching a breakup point.

Global X NASDAQ

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ 100 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolve Cyber and Global X

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

The idea behind Evolve Cyber Security and Global X NASDAQ 100 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.