Correlation Between Eventide Healthcare and Brown Advisory

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

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

Diversification Opportunities for Eventide Healthcare and Brown Advisory

0.02

Correlation Coefficient

Eventide Healthcare  Brown Advisory

Significant diversification

The 3 months correlation between EVENTIDE and Brown is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Healthcare Life and Brown Advisory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Funds and Eventide Healthcare 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 Healthcare Life are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Funds has no effect on the direction of Eventide Healthcare i.e., Eventide Healthcare and Brown Advisory go up and down completely randomly.

Pair Corralation between Eventide Healthcare and Brown Advisory

Assuming the 90 days horizon Eventide Healthcare is expected to generate 5.61 times less return on investment than Brown Advisory. In addition to that, Eventide Healthcare is 1.2 times more volatile than Brown Advisory Funds. It trades about 0.02 of its total potential returns per unit of risk. Brown Advisory Funds is currently generating about 0.13 per unit of volatility. If you would invest  1,013  in Brown Advisory Funds on September 3, 2024 and sell it today you would earn a total of  95.00  from holding Brown Advisory Funds or generate 9.38% return on investment over 90 days.

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

Eventide Healthcare Life  vs.  Brown Advisory Funds

Eventide Healthcare Life

Risk-Adjusted Performance

1 of 100

Weak

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

Brown Advisory Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory Funds are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Brown Advisory may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eventide Healthcare and Brown Advisory

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

The idea behind Eventide Healthcare Life and Brown Advisory Funds 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.