Correlation Between Evoke Pharma and First Trust
Can any of the company-specific risk be diversified away by investing in both Evoke Pharma and First Trust 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 Evoke Pharma and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evoke Pharma and First Trust Japan, you can compare the effects of market volatilities on Evoke Pharma and First Trust 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 Evoke Pharma with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evoke Pharma and First Trust.
Diversification Opportunities for Evoke Pharma and First Trust
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evoke and First is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and First Trust Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Japan and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Japan has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and First Trust go up and down completely randomly.
Pair Corralation between Evoke Pharma and First Trust
Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the First Trust. In addition to that, Evoke Pharma is 5.23 times more volatile than First Trust Japan. It trades about -0.05 of its total potential returns per unit of risk. First Trust Japan is currently generating about 0.04 per unit of volatility. If you would invest 4,203 in First Trust Japan on January 26, 2024 and sell it today you would earn a total of 1,064 from holding First Trust Japan or generate 25.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Evoke Pharma vs. First Trust Japan
Performance |
| Timeline |
| Evoke Pharma |
| First Trust Japan |
Evoke Pharma and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evoke Pharma and First Trust
The main advantage of trading using opposite Evoke Pharma and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evoke Pharma position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Evoke Pharma vs. Shuttle Pharmaceuticals | Evoke Pharma vs. Lifecore Biomedical | Evoke Pharma vs. Lucy Scientific Discovery | Evoke Pharma vs. Alimera Sciences |
| First Trust vs. WisdomTree Europe Hedged | First Trust vs. WisdomTree Europe SmallCap | First Trust vs. iShares MSCI Germany |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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