Correlation Between The Texas and Monteagle Select

Can any of the company-specific risk be diversified away by investing in both The Texas and Monteagle Select 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 The Texas and Monteagle Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Texas Fund and Monteagle Select Value, you can compare the effects of market volatilities on The Texas and Monteagle Select 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 The Texas with a short position of Monteagle Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Texas and Monteagle Select.

Diversification Opportunities for The Texas and Monteagle Select

0.66

Correlation Coefficient

The Texas  Monteagle Select

Poor diversification

The 3 months correlation between The and Monteagle is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Texas Fund and Monteagle Select Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monteagle Select Value and The Texas 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 The Texas Fund are associated (or correlated) with Monteagle Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monteagle Select Value has no effect on the direction of The Texas i.e., The Texas and Monteagle Select go up and down completely randomly.

Pair Corralation between The Texas and Monteagle Select

Assuming the 90 days horizon The Texas Fund is expected to generate 1.17 times more return on investment than Monteagle Select. However, The Texas is 1.17 times more volatile than Monteagle Select Value. It trades about -0.01 of its potential returns per unit of risk. Monteagle Select Value is currently generating about -0.14 per unit of risk. If you would invest  1,532  in The Texas Fund on October 10, 2024 and sell it today you would lose (25.00) from holding The Texas Fund or give up 1.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Texas Fund  vs.  Monteagle Select Value

Texas Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Texas Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Texas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monteagle Select Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monteagle Select Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with The Texas and Monteagle Select

The main advantage of trading using opposite The Texas and Monteagle Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Texas position performs unexpectedly, Monteagle Select 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 Monteagle Select will offset losses from the drop in Monteagle Select's long position.

The idea behind The Texas Fund and Monteagle Select Value 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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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.