Correlation Between Heartland Value and Eventide Healthcare

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Can any of the company-specific risk be diversified away by investing in both Heartland Value 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 Heartland Value and Eventide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and Eventide Healthcare Life, you can compare the effects of market volatilities on Heartland Value 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 Heartland Value with a short position of Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Eventide Healthcare.

Diversification Opportunities for Heartland Value and Eventide Healthcare

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Heartland and EVENTIDE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus 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 Heartland Value 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 Heartland Value Plus 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 Heartland Value i.e., Heartland Value and Eventide Healthcare go up and down completely randomly.

Pair Corralation between Heartland Value and Eventide Healthcare

Assuming the 90 days horizon Heartland Value Plus is expected to generate 0.9 times more return on investment than Eventide Healthcare. However, Heartland Value Plus is 1.11 times less risky than Eventide Healthcare. It trades about 0.21 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about -0.05 per unit of risk. If you would invest  3,778  in Heartland Value Plus on September 6, 2024 and sell it today you would earn a total of  257.00  from holding Heartland Value Plus or generate 6.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Heartland Value Plus  vs.  Eventide Healthcare Life

 Performance 
       Timeline  
Heartland Value Plus 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Value Plus are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Heartland Value showed solid returns over the last few months and may actually be approaching a breakup point.
Eventide Healthcare Life 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.

Heartland Value and Eventide Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Heartland Value and Eventide Healthcare

The main advantage of trading using opposite Heartland Value and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Plus 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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