Correlation Between Eton Pharmaceuticals and Accolade

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

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

Diversification Opportunities for Eton Pharmaceuticals and Accolade

0.51

Correlation Coefficient

Eton Pharmaceuticals  Accolade

Very weak diversification

The 3 months correlation between Eton and Accolade is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals and Accolade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accolade and Eton Pharmaceuticals 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 Eton Pharmaceuticals are associated (or correlated) with Accolade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accolade has no effect on the direction of Eton Pharmaceuticals i.e., Eton Pharmaceuticals and Accolade go up and down completely randomly.

Pair Corralation between Eton Pharmaceuticals and Accolade

Given the investment horizon of 90 days Eton Pharmaceuticals is expected to generate 12.4 times less return on investment than Accolade. But when comparing it to its historical volatility, Eton Pharmaceuticals is 2.81 times less risky than Accolade. It trades about 0.03 of its potential returns per unit of risk. Accolade is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  357.00  in Accolade on December 25, 2024 and sell it today you would earn a total of  342.00  from holding Accolade or generate 95.8% return on investment over 90 days.

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

Eton Pharmaceuticals  vs.  Accolade

Eton Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Accolade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accolade are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Accolade exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eton Pharmaceuticals and Accolade

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

The idea behind Eton Pharmaceuticals and Accolade 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.