Correlation Between The National and Eagle Growth
Can any of the company-specific risk be diversified away by investing in both The National and Eagle Growth 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 The National and Eagle Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Eagle Growth Income, you can compare the effects of market volatilities on The National and Eagle Growth 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 The National with a short position of Eagle Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Eagle Growth.
Diversification Opportunities for The National and Eagle Growth
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and Eagle is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Eagle Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Growth Income and The National 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 National Tax Free are associated (or correlated) with Eagle Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Growth Income has no effect on the direction of The National i.e., The National and Eagle Growth go up and down completely randomly.
Pair Corralation between The National and Eagle Growth
Assuming the 90 days horizon The National Tax Free is expected to under-perform the Eagle Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, The National Tax Free is 3.01 times less risky than Eagle Growth. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Eagle Growth Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,362 in Eagle Growth Income on August 28, 2024 and sell it today you would earn a total of 96.00 from holding Eagle Growth Income or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Eagle Growth Income
Performance |
| Timeline |
| National Tax |
| Eagle Growth Income |
The National and Eagle Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Eagle Growth
The main advantage of trading using opposite The National and Eagle Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, Eagle Growth 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 Eagle Growth will offset losses from the drop in Eagle Growth's long position.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| Eagle Growth vs. Massmutual Premier Funds | Eagle Growth vs. Dreyfus Institutional Reserves | Eagle Growth vs. Blackrock Funds Iii | Eagle Growth vs. Plan 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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