Correlation Between Long Term and Eventide Gilead

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

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

Diversification Opportunities for Long Term and Eventide Gilead

-0.39

Correlation Coefficient

Long Term  Eventide Gilead

Very good diversification

The 3 months correlation between Long and Eventide is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Eventide Gilead Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead and Long Term 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 Long Term Government Fund 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 Long Term i.e., Long Term and Eventide Gilead go up and down completely randomly.

Pair Corralation between Long Term and Eventide Gilead

Assuming the 90 days horizon Long Term Government Fund is expected to generate 11.3 times more return on investment than Eventide Gilead. However, Long Term is 11.3 times more volatile than Eventide Gilead Fund. It trades about 0.03 of its potential returns per unit of risk. Eventide Gilead Fund is currently generating about 0.05 per unit of risk. If you would invest  1,442  in Long Term Government Fund on September 13, 2024 and sell it today you would lose (11.00) from holding Long Term Government Fund or give up 0.76% of portfolio value over 90 days.

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

Long Term Government Fund  vs.  Eventide Gilead Fund

Long Term Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Long Term Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Eventide Gilead

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Gilead Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Eventide Gilead may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Long Term and Eventide Gilead

The main advantage of trading using opposite Long Term and Eventide Gilead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Term 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 Long Term Government Fund and Eventide Gilead Fund 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 Anywhere module to track or share privately all of your investments from the convenience of any device.