Correlation Between Eventide Healthcare and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Lord Abbett 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 Lord Abbett 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 Lord Abbett Health, you can compare the effects of market volatilities on Eventide Healthcare and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Lord Abbett.
Diversification Opportunities for Eventide Healthcare and Lord Abbett
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eventide and Lord is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Health has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Lord Abbett go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Lord Abbett
Assuming the 90 days horizon Eventide Healthcare Life is expected to generate 1.56 times more return on investment than Lord Abbett. However, Eventide Healthcare is 1.56 times more volatile than Lord Abbett Health. It trades about 0.02 of its potential returns per unit of risk. Lord Abbett Health is currently generating about 0.03 per unit of risk. If you would invest 3,050 in Eventide Healthcare Life on August 24, 2024 and sell it today you would earn a total of 302.00 from holding Eventide Healthcare Life or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Lord Abbett Health
Performance |
| Timeline |
| Eventide Healthcare Life |
| Lord Abbett Health |
Eventide Healthcare and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Lord Abbett
The main advantage of trading using opposite Eventide Healthcare and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Eventide Healthcare vs. Ppm High Yield | Eventide Healthcare vs. Ab Global Risk | Eventide Healthcare vs. Pace High Yield | Eventide Healthcare vs. Lgm Risk Managed |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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