Correlation Between Eventide Gilead and Small-company Stock

Can any of the company-specific risk be diversified away by investing in both Eventide Gilead and Small-company Stock 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 Small-company Stock 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 Small Company Stock Fund, you can compare the effects of market volatilities on Eventide Gilead and Small-company Stock 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 Small-company Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Gilead and Small-company Stock.

Diversification Opportunities for Eventide Gilead and Small-company Stock

0.91

Correlation Coefficient

Eventide Gilead  Small-company Stock

Almost no diversification

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

Pair Corralation between Eventide Gilead and Small-company Stock

Assuming the 90 days horizon Eventide Gilead is expected to generate 1.37 times less return on investment than Small-company Stock. But when comparing it to its historical volatility, Eventide Gilead Fund is 1.26 times less risky than Small-company Stock. It trades about 0.17 of its potential returns per unit of risk. Small Company Stock Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,599  in Small Company Stock Fund on August 31, 2024 and sell it today you would earn a total of  369.00  from holding Small Company Stock Fund or generate 14.2% 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.  Small Company Stock 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.

Small-company Stock

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Company Stock Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small-company Stock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eventide Gilead and Small-company Stock

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

The idea behind Eventide Gilead Fund and Small Company Stock 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.