Correlation Between Eagle Small and Eventide Healthcare

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

By analyzing existing cross correlation between Eagle Small Cap and Eventide Healthcare Life, you can compare the effects of market volatilities on Eagle Small 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 Eagle Small with a short position of Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Small and Eventide Healthcare.

Diversification Opportunities for Eagle Small and Eventide Healthcare

0.05

Correlation Coefficient

Eagle Small  Eventide Healthcare

Significant diversification

The 3 months correlation between Eagle and Eventide is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap 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 Eagle Small 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 Eagle Small Cap 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 Eagle Small i.e., Eagle Small and Eventide Healthcare go up and down completely randomly.

Pair Corralation between Eagle Small and Eventide Healthcare

Assuming the 90 days horizon Eagle Small Cap is expected to generate 0.79 times more return on investment than Eventide Healthcare. However, Eagle Small Cap is 1.27 times less risky than Eventide Healthcare. It trades about 0.01 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about -0.08 per unit of risk. If you would invest  2,525  in Eagle Small Cap on September 24, 2024 and sell it today you would earn a total of  2.00  from holding Eagle Small Cap or generate 0.08% return on investment over 90 days.

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

Eagle Small Cap  vs.  Eventide Healthcare Life

Eagle Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Eagle Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eventide Healthcare Life

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Eagle Small and Eventide Healthcare

The main advantage of trading using opposite Eagle Small and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Small 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 Eagle Small Cap 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.