Correlation Between Evolus and Red Light
Can any of the company-specific risk be diversified away by investing in both Evolus and Red Light 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 Evolus and Red Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Red Light Holland, you can compare the effects of market volatilities on Evolus and Red Light 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 Evolus with a short position of Red Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Red Light.
Diversification Opportunities for Evolus and Red Light
Excellent diversification
The 3 months correlation between Evolus and Red is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Red Light Holland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Light Holland and Evolus 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 Evolus Inc are associated (or correlated) with Red Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Light Holland has no effect on the direction of Evolus i.e., Evolus and Red Light go up and down completely randomly.
Pair Corralation between Evolus and Red Light
Given the investment horizon of 90 days Evolus Inc is expected to generate 0.49 times more return on investment than Red Light. However, Evolus Inc is 2.06 times less risky than Red Light. It trades about 0.03 of its potential returns per unit of risk. Red Light Holland is currently generating about 0.01 per unit of risk. If you would invest 1,300 in Evolus Inc on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Evolus Inc or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolus Inc vs. Red Light Holland
Performance |
| Timeline |
| Evolus Inc |
| Red Light Holland |
Evolus and Red Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolus and Red Light
The main advantage of trading using opposite Evolus and Red Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus position performs unexpectedly, Red Light 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 Red Light will offset losses from the drop in Red Light's long position.| Evolus vs. Collegium Pharmaceutical | Evolus vs. Phibro Animal Health | Evolus vs. ANI Pharmaceuticals | Evolus vs. Procaps Group SA |
| Red Light vs. Green Cures Botanical | Red Light vs. Cann American Corp | Red Light vs. Indoor Harvest Corp | Red Light vs. Genomma Lab Internacional |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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