Correlation Between Kontoor Brands and Evolution Mining

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

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

Diversification Opportunities for Kontoor Brands and Evolution Mining

-0.08

Correlation Coefficient

Kontoor Brands  Evolution Mining

Good diversification

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

Pair Corralation between Kontoor Brands and Evolution Mining

Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.78 times more return on investment than Evolution Mining. However, Kontoor Brands is 1.28 times less risky than Evolution Mining. It trades about 0.08 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.04 per unit of risk. If you would invest  7,849  in Kontoor Brands on September 24, 2024 and sell it today you would earn a total of  886.00  from holding Kontoor Brands or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kontoor Brands  vs.  Evolution Mining

Kontoor Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kontoor Brands and Evolution Mining

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

The idea behind Kontoor Brands and Evolution Mining 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.