Correlation Between Eic Value and Power Momentum
Can any of the company-specific risk be diversified away by investing in both Eic Value and Power Momentum 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 Eic Value and Power Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eic Value Fund and Power Momentum Index, you can compare the effects of market volatilities on Eic Value and Power Momentum 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 Eic Value with a short position of Power Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Power Momentum.
Diversification Opportunities for Eic Value and Power Momentum
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eic and Power is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Power Momentum Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Momentum Index and Eic Value 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 Eic Value Fund are associated (or correlated) with Power Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Momentum Index has no effect on the direction of Eic Value i.e., Eic Value and Power Momentum go up and down completely randomly.
Pair Corralation between Eic Value and Power Momentum
Assuming the 90 days horizon Eic Value is expected to generate 1.54 times less return on investment than Power Momentum. But when comparing it to its historical volatility, Eic Value Fund is 1.57 times less risky than Power Momentum. It trades about 0.13 of its potential returns per unit of risk. Power Momentum Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,120 in Power Momentum Index on September 2, 2024 and sell it today you would earn a total of 386.00 from holding Power Momentum Index or generate 34.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eic Value Fund vs. Power Momentum Index
Performance |
| Timeline |
| Eic Value Fund |
| Power Momentum Index |
Eic Value and Power Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eic Value and Power Momentum
The main advantage of trading using opposite Eic Value and Power Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value position performs unexpectedly, Power Momentum 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 Power Momentum will offset losses from the drop in Power Momentum's long position.| Eic Value vs. Alliancebernstein National Municipal | Eic Value vs. Pace Municipal Fixed | Eic Value vs. The National Tax Free | Eic Value vs. Bbh Intermediate Municipal |
| Power Momentum vs. Omni Small Cap Value | Power Momentum vs. Bbh Partner Fund | Power Momentum vs. Eic Value Fund | Power Momentum vs. Commonwealth Global Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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