Correlation Between Eagle Mid and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Eagle Mid and Dow Jones 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 Eagle Mid and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Mid Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Eagle Mid and Dow Jones 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 Eagle Mid with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mid and Dow Jones.
Diversification Opportunities for Eagle Mid and Dow Jones
Almost no diversification
The 3 months correlation between Eagle and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mid Cap and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Eagle Mid 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 Eagle Mid Cap are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Eagle Mid i.e., Eagle Mid and Dow Jones go up and down completely randomly.
Pair Corralation between Eagle Mid and Dow Jones
Assuming the 90 days horizon Eagle Mid Cap is expected to generate 1.35 times more return on investment than Dow Jones. However, Eagle Mid is 1.35 times more volatile than Dow Jones Industrial. It trades about 0.34 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 8,461 in Eagle Mid Cap on August 28, 2024 and sell it today you would earn a total of 833.00 from holding Eagle Mid Cap or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Mid Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Eagle Mid and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Eagle Mid Cap
Pair trading matchups for Eagle Mid
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Eagle Mid and Dow Jones
The main advantage of trading using opposite Eagle Mid and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mid position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Eagle Mid vs. Aqr Large Cap | Eagle Mid vs. Touchstone Large Cap | Eagle Mid vs. Rational Strategic Allocation | Eagle Mid vs. Goldman Sachs Large |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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