Correlation Between Eventide Healthcare and Templeton Global
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Templeton Global 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 Templeton Global 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 Templeton Global Balanced, you can compare the effects of market volatilities on Eventide Healthcare and Templeton Global 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 Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Templeton Global.
Diversification Opportunities for Eventide Healthcare and Templeton Global
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eventide and TEMPLETON is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Templeton Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Balanced 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Balanced has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Templeton Global go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Templeton Global
Assuming the 90 days horizon Eventide Healthcare Life is expected to under-perform the Templeton Global. In addition to that, Eventide Healthcare is 2.55 times more volatile than Templeton Global Balanced. It trades about -0.06 of its total potential returns per unit of risk. Templeton Global Balanced is currently generating about -0.14 per unit of volatility. If you would invest 256.00 in Templeton Global Balanced on August 25, 2024 and sell it today you would lose (9.00) from holding Templeton Global Balanced or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Templeton Global Balanced
Performance |
| Timeline |
| Eventide Healthcare Life |
| Templeton Global Balanced |
Eventide Healthcare and Templeton Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Templeton Global
The main advantage of trading using opposite Eventide Healthcare and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Templeton Global 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 Templeton Global will offset losses from the drop in Templeton Global's long position.The idea behind Eventide Healthcare Life and Templeton Global Balanced 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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