Correlation Between Eafe Pure and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Eafe Pure and Eafe Fund 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 Pure and Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Pure and The Eafe Fund, you can compare the effects of market volatilities on Eafe Pure and Eafe Fund 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 Pure with a short position of Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Pure and Eafe Fund.
Diversification Opportunities for Eafe Pure and Eafe Fund
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 Pure and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund and Eafe Pure 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 Pure are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Eafe Pure i.e., Eafe Pure and Eafe Fund go up and down completely randomly.
Pair Corralation between Eafe Pure and Eafe Fund
Assuming the 90 days horizon Eafe Pure is expected to generate 1.47 times less return on investment than Eafe Fund. In addition to that, Eafe Pure is 1.01 times more volatile than The Eafe Fund. It trades about 0.06 of its total potential returns per unit of risk. The Eafe Fund is currently generating about 0.1 per unit of volatility. If you would invest 1,393 in The Eafe Fund on September 12, 2024 and sell it today you would earn a total of 36.00 from holding The Eafe Fund or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Pure vs. The Eafe Fund
Performance |
| Timeline |
| Eafe Pure |
| Eafe Fund |
Eafe Pure and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Pure and Eafe Fund
The main advantage of trading using opposite Eafe Pure and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Pure position performs unexpectedly, Eafe Fund 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 Fund will offset losses from the drop in Eafe Fund's long position.| Eafe Pure vs. Europacific Growth Fund | Eafe Pure vs. SCOR PK | Eafe Pure vs. Morningstar Unconstrained Allocation | Eafe Pure vs. Thrivent High Yield |
| Eafe Fund vs. Europacific Growth Fund | Eafe Fund vs. SCOR PK | Eafe Fund vs. Morningstar Unconstrained Allocation | Eafe Fund 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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