Correlation Between Winmark and Evgo

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

By analyzing existing cross correlation between Winmark and Evgo Inc, you can compare the effects of market volatilities on Winmark and Evgo 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 Winmark with a short position of Evgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winmark and Evgo.

Diversification Opportunities for Winmark and Evgo

0.03

Correlation Coefficient

Winmark  Evgo

Significant diversification

The 3 months correlation between Winmark and Evgo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Evgo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evgo Inc and Winmark 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 Winmark are associated (or correlated) with Evgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evgo Inc has no effect on the direction of Winmark i.e., Winmark and Evgo go up and down completely randomly.

Pair Corralation between Winmark and Evgo

Given the investment horizon of 90 days Winmark is expected to generate 0.71 times more return on investment than Evgo. However, Winmark is 1.4 times less risky than Evgo. It trades about -0.02 of its potential returns per unit of risk. Evgo Inc is currently generating about -0.44 per unit of risk. If you would invest  36,424  in Winmark on January 29, 2024 and sell it today you would lose (424.00) from holding Winmark or give up 1.16% of portfolio value over 90 days.

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

Winmark  vs.  Evgo Inc

Winmark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Winmark is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Evgo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evgo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Winmark and Evgo

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

The idea behind Winmark and Evgo Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.