Correlation Between Eventide Healthcare and Berkshire Focus
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Berkshire Focus 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 Berkshire Focus 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 Berkshire Focus, you can compare the effects of market volatilities on Eventide Healthcare and Berkshire Focus 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 Berkshire Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Berkshire Focus.
Diversification Opportunities for Eventide Healthcare and Berkshire Focus
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eventide and Berkshire is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Berkshire Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Focus 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 Berkshire Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Focus has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Berkshire Focus go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Berkshire Focus
Assuming the 90 days horizon Eventide Healthcare Life is expected to under-perform the Berkshire Focus. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eventide Healthcare Life is 1.28 times less risky than Berkshire Focus. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Berkshire Focus is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,698 in Berkshire Focus on August 29, 2024 and sell it today you would earn a total of 341.00 from holding Berkshire Focus or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Berkshire Focus
Performance |
| Timeline |
| Eventide Healthcare Life |
| Berkshire Focus |
Eventide Healthcare and Berkshire Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Berkshire Focus
The main advantage of trading using opposite Eventide Healthcare and Berkshire Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Berkshire Focus 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 Berkshire Focus will offset losses from the drop in Berkshire Focus' long position.The idea behind Eventide Healthcare Life and Berkshire Focus 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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