Correlation Between Evolus and EXACT Sciences

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

By analyzing existing cross correlation between Evolus Inc and EXACT Sciences, you can compare the effects of market volatilities on Evolus and EXACT Sciences 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 EXACT Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and EXACT Sciences.

Diversification Opportunities for Evolus and EXACT Sciences

-0.19

Correlation Coefficient

Evolus  EXACT Sciences

Good diversification

The 3 months correlation between Evolus and EXACT is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences 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 EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of Evolus i.e., Evolus and EXACT Sciences go up and down completely randomly.

Pair Corralation between Evolus and EXACT Sciences

Given the investment horizon of 90 days Evolus Inc is expected to under-perform the EXACT Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Evolus Inc is 1.84 times less risky than EXACT Sciences. The stock trades about -0.4 of its potential returns per unit of risk. The EXACT Sciences is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  7,041  in EXACT Sciences on February 1, 2024 and sell it today you would lose (1,040) from holding EXACT Sciences or give up 14.77% of portfolio value over 90 days.

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

Evolus Inc  vs.  EXACT Sciences

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EXACT Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXACT Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EXACT Sciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evolus and EXACT Sciences

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

The idea behind Evolus Inc and EXACT Sciences 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.