Correlation Between Evolv Technologies and Knightscope

Can any of the company-specific risk be diversified away by investing in both Evolv Technologies and Knightscope 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 Knightscope 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 Knightscope, you can compare the effects of market volatilities on Evolv Technologies and Knightscope 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 Knightscope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolv Technologies and Knightscope.

Diversification Opportunities for Evolv Technologies and Knightscope

-0.79

Correlation Coefficient

Evolv Technologies  Knightscope

Pay attention - limited upside

The 3 months correlation between Evolv and Knightscope is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope 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 Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and Knightscope go up and down completely randomly.

Pair Corralation between Evolv Technologies and Knightscope

Given the investment horizon of 90 days Evolv Technologies is expected to generate 3.14 times less return on investment than Knightscope. But when comparing it to its historical volatility, Evolv Technologies Holdings is 1.7 times less risky than Knightscope. It trades about 0.06 of its potential returns per unit of risk. Knightscope is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Knightscope on August 31, 2024 and sell it today you would earn a total of  536.00  from holding Knightscope or generate 44.67% return on investment over 90 days.

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

Evolv Technologies Holdings  vs.  Knightscope

Evolv Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolv Technologies Holdings are ranked lower than 4 (%) 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.

Knightscope

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Knightscope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolv Technologies and Knightscope

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

The idea behind Evolv Technologies Holdings and Knightscope 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.