Correlation Between Guidepath(r) Managed and Eagle Growth
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed 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 Guidepath(r) Managed and Eagle Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidepath Managed Futures and Eagle Growth Income, you can compare the effects of market volatilities on Guidepath(r) Managed 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 Guidepath(r) Managed with a short position of Eagle Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Eagle Growth.
Diversification Opportunities for Guidepath(r) Managed and Eagle Growth
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guidepath(r) and Eagle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures 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 Guidepath(r) Managed 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 Guidepath Managed Futures 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 Guidepath(r) Managed i.e., Guidepath(r) Managed and Eagle Growth go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and Eagle Growth
Assuming the 90 days horizon Guidepath Managed Futures is expected to under-perform the Eagle Growth. In addition to that, Guidepath(r) Managed is 1.51 times more volatile than Eagle Growth Income. It trades about -0.07 of its total potential returns per unit of risk. Eagle Growth Income is currently generating about -0.07 per unit of volatility. If you would invest 2,000 in Eagle Growth Income on November 25, 2024 and sell it today you would lose (19.00) from holding Eagle Growth Income or give up 0.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Guidepath Managed Futures vs. Eagle Growth Income
Performance |
Timeline |
Guidepath Managed Futures |
Eagle Growth Income |
Guidepath(r) Managed and Eagle Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guidepath(r) Managed and Eagle Growth
The main advantage of trading using opposite Guidepath(r) Managed and Eagle Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed 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 idea behind Guidepath Managed Futures and Eagle Growth Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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