Correlation Between Alphabet and Eventide Multi-asset

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

By analyzing existing cross correlation between Alphabet Inc Class C and Eventide Multi Asset Income, you can compare the effects of market volatilities on Alphabet and Eventide Multi-asset 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 Alphabet with a short position of Eventide Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Eventide Multi-asset.

Diversification Opportunities for Alphabet and Eventide Multi-asset

0.65

Correlation Coefficient

Alphabet  Eventide Multi-asset

Poor diversification

The 3 months correlation between Alphabet and Eventide is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Eventide Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Multi Asset and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Eventide Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Multi Asset has no effect on the direction of Alphabet i.e., Alphabet and Eventide Multi-asset go up and down completely randomly.

Pair Corralation between Alphabet and Eventide Multi-asset

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 3.5 times more return on investment than Eventide Multi-asset. However, Alphabet is 3.5 times more volatile than Eventide Multi Asset Income. It trades about 0.09 of its potential returns per unit of risk. Eventide Multi Asset Income is currently generating about 0.19 per unit of risk. If you would invest  15,840  in Alphabet Inc Class C on August 31, 2024 and sell it today you would earn a total of  1,242  from holding Alphabet Inc Class C or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Eventide Multi Asset Income

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Eventide Multi Asset

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Multi Asset Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Eventide Multi-asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Eventide Multi-asset

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

The idea behind Alphabet Inc Class C and Eventide Multi Asset Income 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.