Correlation Between Dream Finders and Evofem Biosciences

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

By analyzing existing cross correlation between Dream Finders Homes and Evofem Biosciences, you can compare the effects of market volatilities on Dream Finders and Evofem Biosciences 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 Dream Finders with a short position of Evofem Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Finders and Evofem Biosciences.

Diversification Opportunities for Dream Finders and Evofem Biosciences

0.25

Correlation Coefficient

Dream Finders  Evofem Biosciences

Modest diversification

The 3 months correlation between Dream and Evofem is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dream Finders Homes and Evofem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evofem Biosciences and Dream Finders 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 Dream Finders Homes are associated (or correlated) with Evofem Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evofem Biosciences has no effect on the direction of Dream Finders i.e., Dream Finders and Evofem Biosciences go up and down completely randomly.

Pair Corralation between Dream Finders and Evofem Biosciences

Considering the 90-day investment horizon Dream Finders Homes is expected to generate 0.29 times more return on investment than Evofem Biosciences. However, Dream Finders Homes is 3.5 times less risky than Evofem Biosciences. It trades about 0.09 of its potential returns per unit of risk. Evofem Biosciences is currently generating about -0.09 per unit of risk. If you would invest  990.00  in Dream Finders Homes on September 3, 2024 and sell it today you would earn a total of  2,337  from holding Dream Finders Homes or generate 236.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.9%
Values	Daily Returns

Dream Finders Homes  vs.  Evofem Biosciences

Dream Finders Homes

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Finders Homes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Dream Finders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evofem Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evofem Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Evofem Biosciences is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dream Finders and Evofem Biosciences

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

The idea behind Dream Finders Homes and Evofem Biosciences 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.