Correlation Between M Large and Carillon Eagle
Can any of the company-specific risk be diversified away by investing in both M Large and Carillon Eagle 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 M Large and Carillon Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Carillon Eagle Mid, you can compare the effects of market volatilities on M Large and Carillon Eagle 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 M Large with a short position of Carillon Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Carillon Eagle.
Diversification Opportunities for M Large and Carillon Eagle
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTCGX and Carillon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Carillon Eagle Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Eagle Mid and M Large 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 M Large Cap are associated (or correlated) with Carillon Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Eagle Mid has no effect on the direction of M Large i.e., M Large and Carillon Eagle go up and down completely randomly.
Pair Corralation between M Large and Carillon Eagle
Assuming the 90 days horizon M Large is expected to generate 1.07 times less return on investment than Carillon Eagle. In addition to that, M Large is 1.06 times more volatile than Carillon Eagle Mid. It trades about 0.08 of its total potential returns per unit of risk. Carillon Eagle Mid is currently generating about 0.09 per unit of volatility. If you would invest 7,002 in Carillon Eagle Mid on September 12, 2024 and sell it today you would earn a total of 1,036 from holding Carillon Eagle Mid or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.55% |
| Values | Daily Returns |
M Large Cap vs. Carillon Eagle Mid
Performance |
| Timeline |
| M Large Cap |
| Carillon Eagle Mid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
M Large and Carillon Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Large and Carillon Eagle
The main advantage of trading using opposite M Large and Carillon Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large position performs unexpectedly, Carillon Eagle 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 Carillon Eagle will offset losses from the drop in Carillon Eagle's long position.| M Large vs. Vanguard Total Stock | M Large vs. Vanguard 500 Index | M Large vs. Vanguard Total Stock | M Large vs. Vanguard Total Stock |
| Carillon Eagle vs. M Large Cap | Carillon Eagle vs. Cb Large Cap | Carillon Eagle vs. Aqr Large Cap | Carillon Eagle vs. Lord Abbett Affiliated |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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