Correlation Between Global X and Evolve Cyber

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

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

Diversification Opportunities for Global X and Evolve Cyber

0.9

Correlation Coefficient

Global X  Evolve Cyber

Almost no diversification

The 3 months correlation between Global and Evolve is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global X Global and Evolve Cyber Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Cyber Security and Global X 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 Global X Global are associated (or correlated) with Evolve Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Cyber Security has no effect on the direction of Global X i.e., Global X and Evolve Cyber go up and down completely randomly.

Pair Corralation between Global X and Evolve Cyber

Assuming the 90 days trading horizon Global X is expected to generate 2.47 times less return on investment than Evolve Cyber. But when comparing it to its historical volatility, Global X Global is 2.1 times less risky than Evolve Cyber. It trades about 0.08 of its potential returns per unit of risk. Evolve Cyber Security is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,800  in Evolve Cyber Security on September 15, 2024 and sell it today you would earn a total of  365.00  from holding Evolve Cyber Security or generate 7.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Global X Global  vs.  Evolve Cyber Security

Global X Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve Cyber Security

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Cyber may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Evolve Cyber

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

The idea behind Global X Global and Evolve Cyber Security 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.