Correlation Between Evolve FANGMA and IShares Core

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

By analyzing existing cross correlation between Evolve FANGMA Index and iShares Core Canadian, you can compare the effects of market volatilities on Evolve FANGMA and IShares Core 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 FANGMA with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve FANGMA and IShares Core.

Diversification Opportunities for Evolve FANGMA and IShares Core

0.74

Correlation Coefficient

Evolve FANGMA  IShares Core

Poor diversification

The 3 months correlation between Evolve and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Evolve FANGMA Index and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian and Evolve FANGMA 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 FANGMA Index are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of Evolve FANGMA i.e., Evolve FANGMA and IShares Core go up and down completely randomly.

Pair Corralation between Evolve FANGMA and IShares Core

Assuming the 90 days trading horizon Evolve FANGMA Index is expected to generate 4.25 times more return on investment than IShares Core. However, Evolve FANGMA is 4.25 times more volatile than iShares Core Canadian. It trades about 0.33 of its potential returns per unit of risk. iShares Core Canadian is currently generating about 0.08 per unit of risk. If you would invest  1,570  in Evolve FANGMA Index on April 23, 2025 and sell it today you would earn a total of  368.00  from holding Evolve FANGMA Index or generate 23.44% return on investment over 90 days.

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

Evolve FANGMA Index  vs.  iShares Core Canadian

Evolve FANGMA Index

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve FANGMA Index are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Evolve FANGMA displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares Core Canadian

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Canadian are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Core 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 FANGMA and IShares Core

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

The idea behind Evolve FANGMA Index and iShares Core Canadian 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.