Correlation Between Super Micro and Evolv Technologies

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

By analyzing existing cross correlation between Super Micro Computer and Evolv Technologies Holdings, you can compare the effects of market volatilities on Super Micro 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 Super Micro with a short position of Evolv Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and Evolv Technologies.

Diversification Opportunities for Super Micro and Evolv Technologies

0.37

Correlation Coefficient

Super Micro  Evolv Technologies

Weak diversification

The 3 months correlation between Super and Evolv is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Super Micro 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 Super Micro Computer 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 Super Micro i.e., Super Micro and Evolv Technologies go up and down completely randomly.

Pair Corralation between Super Micro and Evolv Technologies

Given the investment horizon of 90 days Super Micro Computer is expected to generate 1.1 times more return on investment than Evolv Technologies. However, Super Micro is 1.1 times more volatile than Evolv Technologies Holdings. It trades about 0.03 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.01 per unit of risk. If you would invest  2,443  in Super Micro Computer on August 11, 2024 and sell it today you would earn a total of  9.00  from holding Super Micro Computer or generate 0.37% return on investment over 90 days.

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

Super Micro Computer  vs.  Evolv Technologies Holdings

Super Micro Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Micro Computer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Evolv Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolv Technologies Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Evolv Technologies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Super Micro and Evolv Technologies

The main advantage of trading using opposite Super Micro and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro 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 Super Micro Computer 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..