Correlation Between Eventide Healthcare and Eventide Limited-term
Can any of the company-specific risk be diversified away by investing in both Eventide Healthcare and Eventide Limited-term 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 Eventide Limited-term 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 Eventide Limited Term Bond, you can compare the effects of market volatilities on Eventide Healthcare and Eventide Limited-term 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 Eventide Limited-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Healthcare and Eventide Limited-term.
Diversification Opportunities for Eventide Healthcare and Eventide Limited-term
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eventide and Eventide is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Eventide Limited Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Limited Term 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 Eventide Limited-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Limited Term has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Eventide Limited-term go up and down completely randomly.
Pair Corralation between Eventide Healthcare and Eventide Limited-term
Assuming the 90 days horizon Eventide Healthcare Life is expected to generate 10.35 times more return on investment than Eventide Limited-term. However, Eventide Healthcare is 10.35 times more volatile than Eventide Limited Term Bond. It trades about 0.05 of its potential returns per unit of risk. Eventide Limited Term Bond is currently generating about 0.18 per unit of risk. If you would invest 3,418 in Eventide Healthcare Life on August 29, 2024 and sell it today you would earn a total of 264.00 from holding Eventide Healthcare Life or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Healthcare Life vs. Eventide Limited Term Bond
Performance |
| Timeline |
| Eventide Healthcare Life |
| Eventide Limited Term |
Eventide Healthcare and Eventide Limited-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Healthcare and Eventide Limited-term
The main advantage of trading using opposite Eventide Healthcare and Eventide Limited-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Healthcare position performs unexpectedly, Eventide Limited-term 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 Eventide Limited-term will offset losses from the drop in Eventide Limited-term's long position.The idea behind Eventide Healthcare Life and Eventide Limited Term Bond 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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