Correlation Between Super Micro and Evolv Technologies

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

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

Diversification Opportunities for Super Micro and Evolv Technologies

0.76

Correlation Coefficient

Super Micro  Evolv Technologies

Poor diversification

The 3 months correlation between Super and Evolv is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Super Micro 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 Super Micro Computer are associated (or correlated) with Evolv Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolv Technologies has no effect on the direction of Super Micro i.e., Super Micro and Evolv Technologies go up and down completely randomly.

Pair Corralation between Super Micro and Evolv Technologies

Given the investment horizon of 90 days Super Micro Computer is expected to generate 0.65 times more return on investment than Evolv Technologies. However, Super Micro Computer is 1.55 times less risky than Evolv Technologies. It trades about 0.07 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about 0.04 per unit of risk. If you would invest  839.00  in Super Micro Computer on September 21, 2024 and sell it today you would earn a total of  2,384  from holding Super Micro Computer or generate 284.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.99%
Values	Daily Returns

Super Micro Computer  vs.  Evolv Technologies Holdings

Super Micro Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Micro Computer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Evolv Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolv Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Super Micro and Evolv Technologies

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

The idea behind Super Micro Computer and Evolv Technologies Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.