Correlation Between Eventide Healthcare and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Eventide Healthcare and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Pear Tree.
Diversification Opportunities for Eventide Healthcare and Pear Tree
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EVENTIDE and Pear is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Pear Tree go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Pear Tree
Assuming the 90 days horizon Eventide Healthcare Life is expected to generate 2.09 times more return on investment than Pear Tree. However, Eventide Healthcare is 2.09 times more volatile than Pear Tree Polaris. It trades about 0.04 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.03 per unit of risk. If you would invest 3,162 in Eventide Healthcare Life on September 4, 2024 and sell it today you would earn a total of 369.00 from holding Eventide Healthcare Life or generate 11.67% 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. Pear Tree Polaris
Performance |
| Timeline |
| Eventide Healthcare Life |
| Pear Tree Polaris |
Eventide Healthcare and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Pear Tree
The main advantage of trading using opposite Eventide Healthcare and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Eventide Healthcare vs. Scharf Global Opportunity | Eventide Healthcare vs. Nationwide Global Equity | Eventide Healthcare vs. Legg Mason Global | Eventide Healthcare vs. Alliancebernstein Global High |
| Pear Tree vs. John Hancock Money | Pear Tree vs. First American Funds | Pear Tree vs. Lord Abbett Emerging | Pear Tree vs. Wt Mutual 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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