Correlation Between Eafe Fund and Eafe Pure
Can any of the company-specific risk be diversified away by investing in both Eafe Fund and Eafe Pure 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 Eafe Fund and Eafe Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Fund and The Eafe Pure, you can compare the effects of market volatilities on Eafe Fund and Eafe Pure 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 Eafe Fund with a short position of Eafe Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Fund and Eafe Pure.
Diversification Opportunities for Eafe Fund and Eafe Pure
Very weak diversification
The 3 months correlation between Eafe and Eafe is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Fund and The Eafe Pure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Pure and Eafe Fund 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 The Eafe Fund are associated (or correlated) with Eafe Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Pure has no effect on the direction of Eafe Fund i.e., Eafe Fund and Eafe Pure go up and down completely randomly.
Pair Corralation between Eafe Fund and Eafe Pure
Assuming the 90 days horizon The Eafe Fund is expected to generate 1.17 times more return on investment than Eafe Pure. However, Eafe Fund is 1.17 times more volatile than The Eafe Pure. It trades about 0.03 of its potential returns per unit of risk. The Eafe Pure is currently generating about 0.01 per unit of risk. If you would invest 1,272 in The Eafe Fund on September 12, 2024 and sell it today you would earn a total of 157.00 from holding The Eafe Fund or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Fund vs. The Eafe Pure
Performance |
| Timeline |
| Eafe Fund |
| Eafe Pure |
Eafe Fund and Eafe Pure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Fund and Eafe Pure
The main advantage of trading using opposite Eafe Fund and Eafe Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Fund position performs unexpectedly, Eafe Pure 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 Eafe Pure will offset losses from the drop in Eafe Pure's long position.| Eafe Fund vs. Europacific Growth Fund | Eafe Fund vs. SCOR PK | Eafe Fund vs. Morningstar Unconstrained Allocation | Eafe Fund vs. Thrivent High Yield |
| Eafe Pure vs. Europacific Growth Fund | Eafe Pure vs. SCOR PK | Eafe Pure vs. Morningstar Unconstrained Allocation | Eafe Pure vs. Thrivent High Yield |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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