Correlation Between Eventide Healthcare and American Century
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and American Century 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 Eventide Healthcare and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eventide Healthcare Life and American Century Focused, you can compare the effects of market volatilities on Eventide Healthcare and American Century 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 Eventide Healthcare with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and American Century.
Diversification Opportunities for Eventide Healthcare and American Century
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eventide and American is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and American Century Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Focused and Eventide Healthcare 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 Eventide Healthcare Life are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Focused has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and American Century go up and down completely randomly.
Pair Corralation between Eventide Healthcare and American Century
Assuming the 90 days horizon Eventide Healthcare Life is expected to under-perform the American Century. In addition to that, Eventide Healthcare is 2.42 times more volatile than American Century Focused. It trades about -0.05 of its total potential returns per unit of risk. American Century Focused is currently generating about 0.14 per unit of volatility. If you would invest 1,751 in American Century Focused on September 13, 2024 and sell it today you would earn a total of 39.00 from holding American Century Focused or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eventide Healthcare Life vs. American Century Focused
Performance |
| Timeline |
| Eventide Healthcare Life |
| American Century Focused |
Eventide Healthcare and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and American Century
The main advantage of trading using opposite Eventide Healthcare and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Eventide Healthcare vs. Falcon Focus Scv | Eventide Healthcare vs. Qs Large Cap | Eventide Healthcare vs. Materials Portfolio Fidelity | Eventide Healthcare vs. Iaadx |
| American Century vs. Value Fund Investor | American Century vs. Ultra Fund Investor | American Century vs. Growth Fund Investor | American Century vs. Income Growth Fund |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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