Correlation Between Eventide Healthcare and American Funds
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and American Funds 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 American Funds 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 American Funds Retirement, you can compare the effects of market volatilities on Eventide Healthcare and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and American Funds.
Diversification Opportunities for Eventide Healthcare and American Funds
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eventide and American is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and American Funds Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Retirement 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Retirement has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and American Funds go up and down completely randomly.
Pair Corralation between Eventide Healthcare and American Funds
Assuming the 90 days horizon Eventide Healthcare is expected to generate 2.83 times less return on investment than American Funds. In addition to that, Eventide Healthcare is 4.89 times more volatile than American Funds Retirement. It trades about 0.02 of its total potential returns per unit of risk. American Funds Retirement is currently generating about 0.24 per unit of volatility. If you would invest 1,267 in American Funds Retirement on September 3, 2024 and sell it today you would earn a total of 22.00 from holding American Funds Retirement or generate 1.74% 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. American Funds Retirement
Performance |
| Timeline |
| Eventide Healthcare Life |
| American Funds Retirement |
Eventide Healthcare and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and American Funds
The main advantage of trading using opposite Eventide Healthcare and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Eventide Healthcare vs. Vanguard Health Care | Eventide Healthcare vs. Vanguard Health Care | Eventide Healthcare vs. T Rowe Price | Eventide Healthcare vs. T Rowe Price |
| American Funds vs. Alphacentric Lifesci Healthcare | American Funds vs. Blackrock Health Sciences | American Funds vs. Eventide Healthcare Life | American Funds vs. Deutsche Health And |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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