Correlation Between Eic Value and Small Cap
Can any of the company-specific risk be diversified away by investing in both Eic Value and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Eic Value and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Small Cap.
Diversification Opportunities for Eic Value and Small Cap
Very poor diversification
The 3 months correlation between Eic and Small is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Eic Value i.e., Eic Value and Small Cap go up and down completely randomly.
Pair Corralation between Eic Value and Small Cap
Assuming the 90 days horizon Eic Value is expected to generate 1.13 times less return on investment than Small Cap. But when comparing it to its historical volatility, Eic Value Fund is 1.61 times less risky than Small Cap. It trades about 0.06 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,228 in Small Cap Stock on August 27, 2024 and sell it today you would earn a total of 285.00 from holding Small Cap Stock or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eic Value Fund vs. Small Cap Stock
Performance |
| Timeline |
| Eic Value Fund |
| Small Cap Stock |
Eic Value and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eic Value and Small Cap
The main advantage of trading using opposite Eic Value and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Eic Value vs. Archer Balanced Fund | Eic Value vs. Balanced Fund Investor | Eic Value vs. Ab Value Fund | Eic Value vs. Volumetric Fund Volumetric |
| Small Cap vs. Nasdaq 100 2x Strategy | Small Cap vs. Eagle Mlp Strategy | Small Cap vs. Investec Emerging Markets | Small Cap vs. Dws Emerging Markets |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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