Correlation Between Evolve Cyber and First Trust

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

By analyzing existing cross correlation between Evolve Cyber Security and First Trust Indxx, you can compare the effects of market volatilities on Evolve Cyber and First Trust 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 Evolve Cyber with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Cyber and First Trust.

Diversification Opportunities for Evolve Cyber and First Trust

0.83

Correlation Coefficient

Evolve Cyber  First Trust

Very poor diversification

The 3 months correlation between Evolve and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Cyber Security and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Evolve Cyber 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 Evolve Cyber Security are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Evolve Cyber i.e., Evolve Cyber and First Trust go up and down completely randomly.

Pair Corralation between Evolve Cyber and First Trust

Assuming the 90 days trading horizon Evolve Cyber is expected to generate 1.07 times less return on investment than First Trust. But when comparing it to its historical volatility, Evolve Cyber Security is 1.01 times less risky than First Trust. It trades about 0.2 of its potential returns per unit of risk. First Trust Indxx is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,098  in First Trust Indxx on April 20, 2025 and sell it today you would earn a total of  203.00  from holding First Trust Indxx or generate 18.49% return on investment over 90 days.

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

Evolve Cyber Security  vs.  First Trust Indxx

Evolve Cyber Security

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Cyber displayed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Indxx

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Indxx are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolve Cyber and First Trust

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

The idea behind Evolve Cyber Security and First Trust Indxx 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.

Check out your portfolio center.

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.