Correlation Between Evolve Global and First Trust

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

Diversification Opportunities for Evolve Global and First Trust

0.24

Correlation Coefficient

Evolve Global  First Trust

Modest diversification

The 3 months correlation between Evolve and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Global Healthcare and First Trust NYSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NYSE and Evolve Global 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 Global Healthcare 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 NYSE has no effect on the direction of Evolve Global i.e., Evolve Global and First Trust go up and down completely randomly.

Pair Corralation between Evolve Global and First Trust

Assuming the 90 days trading horizon Evolve Global is expected to generate 1.69 times less return on investment than First Trust. But when comparing it to its historical volatility, Evolve Global Healthcare is 1.05 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust NYSE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,731  in First Trust NYSE on April 23, 2025 and sell it today you would earn a total of  112.00  from holding First Trust NYSE or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Evolve Global Healthcare  vs.  First Trust NYSE

Evolve Global Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Global Healthcare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Evolve Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Trust NYSE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NYSE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary 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 Global and First Trust

The main advantage of trading using opposite Evolve Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Global 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 Global Healthcare and First Trust NYSE 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.