Correlation Between Conestoga Smid and Eagle Mid

Can any of the company-specific risk be diversified away by investing in both Conestoga Smid and Eagle Mid 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 Conestoga Smid and Eagle Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Conestoga Smid Cap and Eagle Mid Cap, you can compare the effects of market volatilities on Conestoga Smid and Eagle Mid 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 Conestoga Smid with a short position of Eagle Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conestoga Smid and Eagle Mid.

Diversification Opportunities for Conestoga Smid and Eagle Mid

0.98

Correlation Coefficient

Conestoga Smid  Eagle Mid

Almost no diversification

The 3 months correlation between Conestoga and Eagle is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Conestoga Smid Cap and Eagle Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mid Cap and Conestoga Smid 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 Conestoga Smid Cap are associated (or correlated) with Eagle Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mid Cap has no effect on the direction of Conestoga Smid i.e., Conestoga Smid and Eagle Mid go up and down completely randomly.

Pair Corralation between Conestoga Smid and Eagle Mid

Assuming the 90 days horizon Conestoga Smid Cap is expected to generate 0.92 times more return on investment than Eagle Mid. However, Conestoga Smid Cap is 1.08 times less risky than Eagle Mid. It trades about 0.1 of its potential returns per unit of risk. Eagle Mid Cap is currently generating about 0.07 per unit of risk. If you would invest  2,095  in Conestoga Smid Cap on September 6, 2024 and sell it today you would earn a total of  772.00  from holding Conestoga Smid Cap or generate 36.85% return on investment over 90 days.

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

Conestoga Smid Cap  vs.  Eagle Mid Cap

Conestoga Smid Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Smid Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Conestoga Smid showed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Mid Cap

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Mid Cap are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eagle Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Conestoga Smid and Eagle Mid

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

The idea behind Conestoga Smid Cap and Eagle Mid Cap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.