Correlation Between Eventide Healthcare and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Baillie Gifford 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 Baillie Gifford 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 Baillie Gifford Health, you can compare the effects of market volatilities on Eventide Healthcare and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Baillie Gifford.
Diversification Opportunities for Eventide Healthcare and Baillie Gifford
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eventide and Baillie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health 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 Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Health has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Baillie Gifford go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Baillie Gifford
Assuming the 90 days horizon Eventide Healthcare Life is expected to generate 1.19 times more return on investment than Baillie Gifford. However, Eventide Healthcare is 1.19 times more volatile than Baillie Gifford Health. It trades about -0.15 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.22 per unit of risk. If you would invest 3,589 in Eventide Healthcare Life on August 27, 2024 and sell it today you would lose (193.00) from holding Eventide Healthcare Life or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Baillie Gifford Health
Performance |
| Timeline |
| Eventide Healthcare Life |
| Baillie Gifford Health |
Eventide Healthcare and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Baillie Gifford
The main advantage of trading using opposite Eventide Healthcare and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Eventide Healthcare vs. Ab Small Cap | Eventide Healthcare vs. Heartland Value Plus | Eventide Healthcare vs. Ab Discovery Value | Eventide Healthcare vs. Queens Road Small |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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