Correlation Between Evolve European and Dynamic Active

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

By analyzing existing cross correlation between Evolve European Banks and Dynamic Active Crossover, you can compare the effects of market volatilities on Evolve European and Dynamic Active 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 European with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve European and Dynamic Active.

Diversification Opportunities for Evolve European and Dynamic Active

0.87

Correlation Coefficient

Evolve European  Dynamic Active

Very poor diversification

The 3 months correlation between Evolve and Dynamic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Evolve European Banks and Dynamic Active Crossover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Crossover and Evolve European 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 European Banks are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Crossover has no effect on the direction of Evolve European i.e., Evolve European and Dynamic Active go up and down completely randomly.

Pair Corralation between Evolve European and Dynamic Active

Assuming the 90 days trading horizon Evolve European Banks is expected to generate 5.62 times more return on investment than Dynamic Active. However, Evolve European is 5.62 times more volatile than Dynamic Active Crossover. It trades about 0.13 of its potential returns per unit of risk. Dynamic Active Crossover is currently generating about 0.09 per unit of risk. If you would invest  890.00  in Evolve European Banks on May 4, 2025 and sell it today you would earn a total of  550.00  from holding Evolve European Banks or generate 61.8% return on investment over 90 days.

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

Evolve European Banks  vs.  Dynamic Active Crossover

Evolve European Banks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve European Banks are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Evolve European may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Dynamic Active Crossover

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Crossover are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dynamic Active 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 European and Dynamic Active

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

The idea behind Evolve European Banks and Dynamic Active Crossover 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.