Correlation Between Advance Auto and Evolv Technologies
Can any of the company-specific risk be diversified away by investing in both Advance Auto 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 Advance Auto and Evolv Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Evolv Technologies Holdings, you can compare the effects of market volatilities on Advance Auto 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 Advance Auto with a short position of Evolv Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Evolv Technologies.
Diversification Opportunities for Advance Auto and Evolv Technologies
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advance and Evolv is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Advance Auto 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 Advance Auto Parts 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 Advance Auto i.e., Advance Auto and Evolv Technologies go up and down completely randomly.
Pair Corralation between Advance Auto and Evolv Technologies
Considering the 90-day investment horizon Advance Auto Parts is expected to generate 0.71 times more return on investment than Evolv Technologies. However, Advance Auto Parts is 1.41 times less risky than Evolv Technologies. It trades about -0.09 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.2 per unit of risk. If you would invest 7,788 in Advance Auto Parts on February 7, 2024 and sell it today you would lose (402.00) from holding Advance Auto Parts or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Advance Auto Parts vs. Evolv Technologies Holdings
Performance |
| Timeline |
| Advance Auto Parts |
| Evolv Technologies |
Advance Auto and Evolv Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Evolv Technologies
The main advantage of trading using opposite Advance Auto and Evolv Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto 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.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| Evolv Technologies vs. CACI International | Evolv Technologies vs. Jack Henry Associates | Evolv Technologies vs. ExlService Holdings | Evolv Technologies vs. Infosys Ltd ADR |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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