Correlation Between Sarofim Equity and Eagle Small
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity 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 Sarofim Equity and Eagle Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and Eagle Small Cap, you can compare the effects of market volatilities on Sarofim Equity 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 Sarofim Equity with a short position of Eagle Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and Eagle Small.
Diversification Opportunities for Sarofim Equity and Eagle Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sarofim and Eagle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity i.e., Sarofim Equity and Eagle Small go up and down completely randomly.
Pair Corralation between Sarofim Equity and Eagle Small
Assuming the 90 days horizon Sarofim Equity is expected to generate 1.76 times less return on investment than Eagle Small. But when comparing it to its historical volatility, Sarofim Equity is 2.05 times less risky than Eagle Small. It trades about 0.34 of its potential returns per unit of risk. Eagle Small Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,485 in Eagle Small Cap on September 1, 2024 and sell it today you would earn a total of 225.00 from holding Eagle Small Cap or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sarofim Equity vs. Eagle Small Cap
Performance |
| Timeline |
| Sarofim Equity |
| Eagle Small Cap |
Sarofim Equity and Eagle Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and Eagle Small
The main advantage of trading using opposite Sarofim Equity and Eagle Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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.| Sarofim Equity vs. Dunham Large Cap | Sarofim Equity vs. M Large Cap | Sarofim Equity vs. Americafirst Large Cap | Sarofim Equity vs. Jhancock Disciplined Value |
| Eagle Small vs. Sarofim Equity | Eagle Small vs. Ab Select Equity | Eagle Small vs. Huber Capital Equity | Eagle Small vs. Cutler Equity |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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