Correlation Between Evolv Technologies and ClearSign Combustion

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

By analyzing existing cross correlation between Evolv Technologies Holdings and ClearSign Combustion, you can compare the effects of market volatilities on Evolv Technologies and ClearSign Combustion 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 Evolv Technologies with a short position of ClearSign Combustion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolv Technologies and ClearSign Combustion.

Diversification Opportunities for Evolv Technologies and ClearSign Combustion

-0.33

Correlation Coefficient

Evolv Technologies  ClearSign Combustion

Very good diversification

The 3 months correlation between Evolv and ClearSign is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion and Evolv Technologies 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 Evolv Technologies Holdings are associated (or correlated) with ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Evolv Technologies and ClearSign Combustion

Given the investment horizon of 90 days Evolv Technologies is expected to generate 2.01 times less return on investment than ClearSign Combustion. In addition to that, Evolv Technologies is 1.32 times more volatile than ClearSign Combustion. It trades about 0.07 of its total potential returns per unit of risk. ClearSign Combustion is currently generating about 0.18 per unit of volatility. If you would invest  71.00  in ClearSign Combustion on September 3, 2024 and sell it today you would earn a total of  47.00  from holding ClearSign Combustion or generate 66.2% return on investment over 90 days.

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

Evolv Technologies Holdings  vs.  ClearSign Combustion

Evolv Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolv Technologies Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Evolv Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

ClearSign Combustion

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolv Technologies and ClearSign Combustion

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

The idea behind Evolv Technologies Holdings and ClearSign Combustion 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.