Correlation Between Jones Lang and Eventide Healthcare

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

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

Diversification Opportunities for Jones Lang and Eventide Healthcare

0.11

Correlation Coefficient

Jones Lang  Eventide Healthcare

Average diversification

The 3 months correlation between Jones and Eventide is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jones Lang Lasalleome 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 Jones Lang 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 Jones Lang Lasalleome 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 Jones Lang i.e., Jones Lang and Eventide Healthcare go up and down completely randomly.

Pair Corralation between Jones Lang and Eventide Healthcare

Assuming the 90 days trading horizon Jones Lang Lasalleome is expected to under-perform the Eventide Healthcare. But the fund apears to be less risky and, when comparing its historical volatility, Jones Lang Lasalleome is 7.4 times less risky than Eventide Healthcare. The fund trades about -0.11 of its potential returns per unit of risk. The Eventide Healthcare Life is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,663  in Eventide Healthcare Life on October 4, 2024 and sell it today you would lose (443.00) from holding Eventide Healthcare Life or give up 12.09% of portfolio value over 90 days.

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

Jones Lang Lasalleome  vs.  Eventide Healthcare Life

Jones Lang Lasalleome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jones Lang Lasalleome has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jones Lang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eventide Healthcare Life

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jones Lang and Eventide Healthcare

The main advantage of trading using opposite Jones Lang and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jones Lang 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 Jones Lang Lasalleome 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.