Correlation Between Eventide Gilead and Edgewood Growth

Can any of the company-specific risk be diversified away by investing in both Eventide Gilead and Edgewood Growth 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 Gilead and Edgewood Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eventide Gilead Fund and Edgewood Growth Fund, you can compare the effects of market volatilities on Eventide Gilead and Edgewood Growth 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 Gilead with a short position of Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Gilead and Edgewood Growth.

Diversification Opportunities for Eventide Gilead and Edgewood Growth

0.91

Correlation Coefficient

Eventide Gilead  Edgewood Growth

Almost no diversification

The 3 months correlation between Eventide and Edgewood is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Gilead Fund and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth and Eventide Gilead 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 Gilead Fund are associated (or correlated) with Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Eventide Gilead i.e., Eventide Gilead and Edgewood Growth go up and down completely randomly.

Pair Corralation between Eventide Gilead and Edgewood Growth

Assuming the 90 days horizon Eventide Gilead Fund is expected to generate 1.02 times more return on investment than Edgewood Growth. However, Eventide Gilead is 1.02 times more volatile than Edgewood Growth Fund. It trades about 0.17 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about 0.14 per unit of risk. If you would invest  4,869  in Eventide Gilead Fund on August 31, 2024 and sell it today you would earn a total of  498.00  from holding Eventide Gilead Fund or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Eventide Gilead Fund  vs.  Edgewood Growth Fund

Eventide Gilead

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Gilead Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Eventide Gilead may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Edgewood Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewood Growth Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Edgewood Growth may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Eventide Gilead and Edgewood Growth

The main advantage of trading using opposite Eventide Gilead and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Gilead position performs unexpectedly, Edgewood Growth 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 Edgewood Growth will offset losses from the drop in Edgewood Growth's long position.

The idea behind Eventide Gilead Fund and Edgewood Growth Fund 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.