Correlation Between Global Gold and Eventide Healthcare
Can any of the company-specific risk be diversified away by investing in both Global Gold and Eventide Healthcare 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 Global Gold and Eventide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Eventide Healthcare Life, you can compare the effects of market volatilities on Global Gold and Eventide Healthcare 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 Global Gold with a short position of Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Eventide Healthcare.
Diversification Opportunities for Global Gold and Eventide Healthcare
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Eventide is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Eventide Healthcare Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Healthcare Life and Global Gold 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 Global Gold Fund are associated (or correlated) with Eventide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Healthcare Life has no effect on the direction of Global Gold i.e., Global Gold and Eventide Healthcare go up and down completely randomly.
Pair Corralation between Global Gold and Eventide Healthcare
Assuming the 90 days horizon Global Gold Fund is expected to generate 0.92 times more return on investment than Eventide Healthcare. However, Global Gold Fund is 1.09 times less risky than Eventide Healthcare. It trades about 0.48 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about 0.15 per unit of risk. If you would invest 1,193 in Global Gold Fund on November 5, 2024 and sell it today you would earn a total of 144.00 from holding Global Gold Fund or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Eventide Healthcare Life
Performance |
| Timeline |
| Global Gold Fund |
| Eventide Healthcare Life |
Global Gold and Eventide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Eventide Healthcare
The main advantage of trading using opposite Global Gold and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Eventide Healthcare 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 Eventide Healthcare will offset losses from the drop in Eventide Healthcare's long position.| Global Gold vs. Fuhkbx | Global Gold vs. Small Pany Growth | Global Gold vs. Wmcanx | Global Gold vs. Rational Dividend Capture |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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