Correlation Between Smallcap Growth and Eagle Small
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Eagle Small 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 Smallcap Growth and Eagle Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Eagle Small Cap, you can compare the effects of market volatilities on Smallcap Growth and Eagle Small 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 Smallcap Growth with a short position of Eagle Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Eagle Small.
Diversification Opportunities for Smallcap Growth and Eagle Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Smallcap and Eagle is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Eagle Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Small Cap and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Eagle Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Small Cap has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Eagle Small go up and down completely randomly.
Pair Corralation between Smallcap Growth and Eagle Small
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 0.97 times more return on investment than Eagle Small. However, Smallcap Growth Fund is 1.03 times less risky than Eagle Small. It trades about 0.05 of its potential returns per unit of risk. Eagle Small Cap is currently generating about 0.03 per unit of risk. If you would invest 1,212 in Smallcap Growth Fund on September 19, 2024 and sell it today you would earn a total of 393.00 from holding Smallcap Growth Fund or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Eagle Small Cap
Performance |
| Timeline |
| Smallcap Growth |
| Eagle Small Cap |
Smallcap Growth and Eagle Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Eagle Small
The main advantage of trading using opposite Smallcap Growth and Eagle Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Eagle Small 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 Small will offset losses from the drop in Eagle Small's long position.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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