Correlation Between Ouster and EVgo Equity

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

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

Diversification Opportunities for Ouster and EVgo Equity

-0.06

Correlation Coefficient

Ouster  EVgo Equity

Good diversification

The 3 months correlation between Ouster and EVgo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ouster Inc and EVgo Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVgo Equity Warrants and Ouster 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 Ouster Inc are associated (or correlated) with EVgo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVgo Equity Warrants has no effect on the direction of Ouster i.e., Ouster and EVgo Equity go up and down completely randomly.

Pair Corralation between Ouster and EVgo Equity

Assuming the 90 days trading horizon Ouster is expected to generate 2.32 times less return on investment than EVgo Equity. But when comparing it to its historical volatility, Ouster Inc is 2.39 times less risky than EVgo Equity. It trades about 0.12 of its potential returns per unit of risk. EVgo Equity Warrants is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  32.00  in EVgo Equity Warrants on September 25, 2024 and sell it today you would earn a total of  35.00  from holding EVgo Equity Warrants or generate 109.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Ouster Inc  vs.  EVgo Equity Warrants

Ouster Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ouster Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ouster unveiled solid returns over the last few months and may actually be approaching a breakup point.

EVgo Equity Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVgo Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EVgo Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ouster and EVgo Equity

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

The idea behind Ouster Inc and EVgo Equity Warrants 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.