Correlation Between Evolus and Alkermes Plc

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

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

Diversification Opportunities for Evolus and Alkermes Plc

-0.29

Correlation Coefficient

Evolus  Alkermes Plc

Very good diversification

The 3 months correlation between Evolus and Alkermes is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Evolus 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 Evolus Inc are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Evolus i.e., Evolus and Alkermes Plc go up and down completely randomly.

Pair Corralation between Evolus and Alkermes Plc

Given the investment horizon of 90 days Evolus Inc is expected to under-perform the Alkermes Plc. In addition to that, Evolus is 1.5 times more volatile than Alkermes Plc. It trades about -0.04 of its total potential returns per unit of risk. Alkermes Plc is currently generating about 0.03 per unit of volatility. If you would invest  2,845  in Alkermes Plc on August 30, 2024 and sell it today you would earn a total of  87.00  from holding Alkermes Plc or generate 3.06% return on investment over 90 days.

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

Evolus Inc  vs.  Alkermes Plc

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alkermes Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Alkermes Plc is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evolus and Alkermes Plc

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

The idea behind Evolus Inc and Alkermes Plc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.