Correlation Between Midcap Fund and Eventide Gilead

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

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

Diversification Opportunities for Midcap Fund and Eventide Gilead

0.89

Correlation Coefficient

Midcap Fund  Eventide Gilead

Very poor diversification

The 3 months correlation between Midcap and Eventide is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class and Eventide Gilead in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead and Midcap Fund 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 Midcap Fund Class are associated (or correlated) with Eventide Gilead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Gilead has no effect on the direction of Midcap Fund i.e., Midcap Fund and Eventide Gilead go up and down completely randomly.

Pair Corralation between Midcap Fund and Eventide Gilead

Assuming the 90 days horizon Midcap Fund Class is expected to generate 0.77 times more return on investment than Eventide Gilead. However, Midcap Fund Class is 1.3 times less risky than Eventide Gilead. It trades about 0.09 of its potential returns per unit of risk. Eventide Gilead is currently generating about 0.04 per unit of risk. If you would invest  3,537  in Midcap Fund Class on September 23, 2024 and sell it today you would earn a total of  765.00  from holding Midcap Fund Class or generate 21.63% return on investment over 90 days.

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

Midcap Fund Class  vs.  Eventide Gilead

Midcap Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eventide Gilead

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Gilead are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Eventide Gilead is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Midcap Fund and Eventide Gilead

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

The idea behind Midcap Fund Class and Eventide Gilead 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.