Correlation Between Eventide Healthcare and Eventide Core
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Eventide Core 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 Eventide Core 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 Eventide Core Bond, you can compare the effects of market volatilities on Eventide Healthcare and Eventide Core 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 Eventide Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Eventide Core.
Diversification Opportunities for Eventide Healthcare and Eventide Core
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eventide and Eventide is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Eventide Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Core Bond 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 Eventide Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Core Bond has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Eventide Core go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Eventide Core
Assuming the 90 days horizon Eventide Healthcare Life is expected to under-perform the Eventide Core. In addition to that, Eventide Healthcare is 5.67 times more volatile than Eventide Core Bond. It trades about -0.01 of its total potential returns per unit of risk. Eventide Core Bond is currently generating about 0.07 per unit of volatility. If you would invest 815.00 in Eventide Core Bond on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Eventide Core Bond or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Eventide Core Bond
Performance |
| Timeline |
| Eventide Healthcare Life |
| Eventide Core Bond |
Eventide Healthcare and Eventide Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Eventide Core
The main advantage of trading using opposite Eventide Healthcare and Eventide Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Eventide Core 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 Core will offset losses from the drop in Eventide Core's long position.The idea behind Eventide Healthcare Life and Eventide Core Bond 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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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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