Correlation Between Evolve Active and Evolve Enhanced

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

By analyzing existing cross correlation between Evolve Active Core and Evolve Enhanced Yield, you can compare the effects of market volatilities on Evolve Active and Evolve Enhanced 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 Evolve Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Active and Evolve Enhanced.

Diversification Opportunities for Evolve Active and Evolve Enhanced

0.02

Correlation Coefficient

Evolve Active  Evolve Enhanced

Significant diversification

The 3 months correlation between Evolve and Evolve is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Active Core and Evolve Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Enhanced Yield 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 Core are associated (or correlated) with Evolve Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Enhanced Yield has no effect on the direction of Evolve Active i.e., Evolve Active and Evolve Enhanced go up and down completely randomly.

Pair Corralation between Evolve Active and Evolve Enhanced

Assuming the 90 days trading horizon Evolve Active is expected to generate 1.32 times less return on investment than Evolve Enhanced. But when comparing it to its historical volatility, Evolve Active Core is 3.25 times less risky than Evolve Enhanced. It trades about 0.08 of its potential returns per unit of risk. Evolve Enhanced Yield is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,739  in Evolve Enhanced Yield on April 20, 2025 and sell it today you would earn a total of  20.00  from holding Evolve Enhanced Yield or generate 1.15% return on investment over 90 days.

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

Evolve Active Core  vs.  Evolve Enhanced Yield

Evolve Active Core

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Active Core are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Evolve Active is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Evolve Enhanced Yield

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Enhanced Yield are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Evolve Enhanced 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 Evolve Enhanced

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

The idea behind Evolve Active Core and Evolve Enhanced Yield 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.