Correlation Between Western Asset and Eventide Healthcare
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Eventide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Eventide Healthcare Life, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Eventide Healthcare.
Diversification Opportunities for Western Asset and Eventide Healthcare
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Eventide is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal 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 Western Asset 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 Western Asset Municipal 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 Western Asset i.e., Western Asset and Eventide Healthcare go up and down completely randomly.
Pair Corralation between Western Asset and Eventide Healthcare
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.12 times more return on investment than Eventide Healthcare. However, Western Asset Municipal is 8.6 times less risky than Eventide Healthcare. It trades about 0.23 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about -0.06 per unit of risk. If you would invest 725.00 in Western Asset Municipal on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Western Asset Municipal or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Eventide Healthcare Life
Performance |
| Timeline |
| Western Asset Municipal |
| Eventide Healthcare Life |
Western Asset and Eventide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Eventide Healthcare
The main advantage of trading using opposite Western Asset and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Eventide Healthcare vs. Dunham Large Cap | Eventide Healthcare vs. Aqr Large Cap | Eventide Healthcare vs. Large Cap Growth Profund | Eventide Healthcare vs. Dana Large Cap |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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