Correlation Between ADT and Evolv Technologies
Can any of the company-specific risk be diversified away by investing in both ADT and Evolv Technologies 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 ADT and Evolv Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADT Inc and Evolv Technologies Holdings, you can compare the effects of market volatilities on ADT and Evolv Technologies 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 ADT with a short position of Evolv Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADT and Evolv Technologies.
Diversification Opportunities for ADT and Evolv Technologies
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADT and Evolv is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ADT Inc and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and ADT 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 ADT Inc are associated (or correlated) with Evolv Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolv Technologies has no effect on the direction of ADT i.e., ADT and Evolv Technologies go up and down completely randomly.
Pair Corralation between ADT and Evolv Technologies
Considering the 90-day investment horizon ADT Inc is expected to generate 0.29 times more return on investment than Evolv Technologies. However, ADT Inc is 3.4 times less risky than Evolv Technologies. It trades about 0.31 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.09 per unit of risk. If you would invest 679.00 in ADT Inc on October 20, 2024 and sell it today you would earn a total of 48.00 from holding ADT Inc or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADT Inc vs. Evolv Technologies Holdings
Performance |
| Timeline |
| ADT Inc |
| Evolv Technologies |
ADT and Evolv Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADT and Evolv Technologies
The main advantage of trading using opposite ADT and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADT position performs unexpectedly, Evolv Technologies 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 Evolv Technologies will offset losses from the drop in Evolv Technologies' long position.The idea behind ADT Inc and Evolv Technologies Holdings 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.| Evolv Technologies vs. First Responder Technologies | Evolv Technologies vs. Knightscope | Evolv Technologies vs. LogicMark | Evolv Technologies vs. Guardforce AI Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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