Correlation Between Evolus and Ardelyx

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

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

Diversification Opportunities for Evolus and Ardelyx

0.78

Correlation Coefficient

Evolus  Ardelyx

Poor diversification

The 3 months correlation between Evolus and Ardelyx is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Evolus 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 Evolus Inc are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Evolus i.e., Evolus and Ardelyx go up and down completely randomly.

Pair Corralation between Evolus and Ardelyx

Given the investment horizon of 90 days Evolus is expected to generate 1.76 times less return on investment than Ardelyx. But when comparing it to its historical volatility, Evolus Inc is 2.9 times less risky than Ardelyx. It trades about 0.23 of its potential returns per unit of risk. Ardelyx is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  651.00  in Ardelyx on February 22, 2024 and sell it today you would earn a total of  121.00  from holding Ardelyx or generate 18.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Evolus Inc  vs.  Ardelyx

Evolus Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Evolus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Evolus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Evolus and Ardelyx

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

The idea behind Evolus Inc and Ardelyx 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.