Correlation Between Eve Holding and Momentus

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

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

Diversification Opportunities for Eve Holding and Momentus

-0.38

Correlation Coefficient

Eve Holding  Momentus

Very good diversification

The 3 months correlation between Eve and Momentus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus and Eve Holding 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 Eve Holding are associated (or correlated) with Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Eve Holding i.e., Eve Holding and Momentus go up and down completely randomly.

Pair Corralation between Eve Holding and Momentus

Given the investment horizon of 90 days Eve Holding is expected to generate 1.25 times less return on investment than Momentus. But when comparing it to its historical volatility, Eve Holding is 6.91 times less risky than Momentus. It trades about 0.1 of its potential returns per unit of risk. Momentus is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Momentus on August 27, 2024 and sell it today you would lose (49.00) from holding Momentus or give up 46.67% of portfolio value over 90 days.

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

Eve Holding  vs.  Momentus

Eve Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Momentus

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Momentus are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Momentus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eve Holding and Momentus

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

The idea behind Eve Holding and Momentus 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.