Correlation Between Evolve Active and First Trust

Can any of the company-specific risk be diversified away by investing in both Evolve Active 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 Active 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 Active Canadian and First Trust Senior, you can compare the effects of market volatilities on Evolve Active 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 Active with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Active and First Trust.

Diversification Opportunities for Evolve Active and First Trust

0.95

Correlation Coefficient

Evolve Active  First Trust

Almost no diversification

The 3 months correlation between Evolve and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Active Canadian and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Evolve Active 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 Active Canadian 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 Senior has no effect on the direction of Evolve Active i.e., Evolve Active and First Trust go up and down completely randomly.

Pair Corralation between Evolve Active and First Trust

Assuming the 90 days trading horizon Evolve Active Canadian is expected to generate 1.38 times more return on investment than First Trust. However, Evolve Active is 1.38 times more volatile than First Trust Senior. It trades about 0.39 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.19 per unit of risk. If you would invest  1,566  in Evolve Active Canadian on April 23, 2025 and sell it today you would earn a total of  135.00  from holding Evolve Active Canadian or generate 8.62% return on investment over 90 days.

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

Evolve Active Canadian  vs.  First Trust Senior

Evolve Active Canadian

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Active Canadian are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust Senior

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Senior are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolve Active and First Trust

The main advantage of trading using opposite Evolve Active and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Active 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 Active Canadian and First Trust Senior 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.