Correlation Between Evolve Active and IShares SPTSX

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

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

Diversification Opportunities for Evolve Active and IShares SPTSX

0.08

Correlation Coefficient

Evolve Active  IShares SPTSX

Significant diversification

The 3 months correlation between Evolve and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Active Canadian and iShares SPTSX North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX North and Evolve Active 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 Active Canadian are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX North has no effect on the direction of Evolve Active i.e., Evolve Active and IShares SPTSX go up and down completely randomly.

Pair Corralation between Evolve Active and IShares SPTSX

Assuming the 90 days trading horizon Evolve Active Canadian is expected to generate 0.62 times more return on investment than IShares SPTSX. However, Evolve Active Canadian is 1.61 times less risky than IShares SPTSX. It trades about 0.1 of its potential returns per unit of risk. iShares SPTSX North is currently generating about -0.04 per unit of risk. If you would invest  1,596  in Evolve Active Canadian on September 29, 2024 and sell it today you would earn a total of  25.00  from holding Evolve Active Canadian or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Evolve Active Canadian  vs.  iShares SPTSX North

Evolve Active Canadian

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Active Canadian are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Evolve Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares SPTSX North

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evolve Active and IShares SPTSX

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

The idea behind Evolve Active Canadian and iShares SPTSX North 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.