Correlation Between Aggressive Growth and Eventide Healthcare

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Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Eventide Healthcare 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 Aggressive Growth and Eventide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Fund and Eventide Healthcare Life, you can compare the effects of market volatilities on Aggressive Growth and Eventide Healthcare 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 Aggressive Growth with a short position of Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Eventide Healthcare.

Diversification Opportunities for Aggressive Growth and Eventide Healthcare

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Aggressive and Eventide is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Fund and Eventide Healthcare Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Healthcare Life and Aggressive Growth 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 Aggressive Growth Fund are associated (or correlated) with Eventide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Healthcare Life has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Eventide Healthcare go up and down completely randomly.

Pair Corralation between Aggressive Growth and Eventide Healthcare

Assuming the 90 days horizon Aggressive Growth Fund is expected to generate 0.58 times more return on investment than Eventide Healthcare. However, Aggressive Growth Fund is 1.72 times less risky than Eventide Healthcare. It trades about 0.15 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about -0.05 per unit of risk. If you would invest  7,058  in Aggressive Growth Fund on September 13, 2024 and sell it today you would earn a total of  224.00  from holding Aggressive Growth Fund or generate 3.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aggressive Growth Fund  vs.  Eventide Healthcare Life

 Performance 
       Timeline  
Aggressive Growth 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aggressive Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Eventide Healthcare Life 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eventide Healthcare Life has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Eventide Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aggressive Growth and Eventide Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aggressive Growth and Eventide Healthcare

The main advantage of trading using opposite Aggressive Growth and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Eventide Healthcare 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 Healthcare will offset losses from the drop in Eventide Healthcare's long position.
The idea behind Aggressive Growth Fund and Eventide Healthcare Life 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.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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