Correlation Between Monteagle Enhanced and Sprucegrove International

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

By analyzing existing cross correlation between Monteagle Enhanced Equity and Sprucegrove International Equity, you can compare the effects of market volatilities on Monteagle Enhanced and Sprucegrove International 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 Monteagle Enhanced with a short position of Sprucegrove International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monteagle Enhanced and Sprucegrove International.

Diversification Opportunities for Monteagle Enhanced and Sprucegrove International

0.52

Correlation Coefficient

Monteagle Enhanced  Sprucegrove International

Very weak diversification

The 3 months correlation between Monteagle and Sprucegrove is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monteagle Enhanced Equity and Sprucegrove International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprucegrove International and Monteagle Enhanced 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 Monteagle Enhanced Equity are associated (or correlated) with Sprucegrove International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprucegrove International has no effect on the direction of Monteagle Enhanced i.e., Monteagle Enhanced and Sprucegrove International go up and down completely randomly.

Pair Corralation between Monteagle Enhanced and Sprucegrove International

Assuming the 90 days horizon Monteagle Enhanced Equity is expected to generate 0.84 times more return on investment than Sprucegrove International. However, Monteagle Enhanced Equity is 1.19 times less risky than Sprucegrove International. It trades about -0.09 of its potential returns per unit of risk. Sprucegrove International Equity is currently generating about -0.24 per unit of risk. If you would invest  1,049  in Monteagle Enhanced Equity on October 10, 2024 and sell it today you would lose (44.00) from holding Monteagle Enhanced Equity or give up 4.19% of portfolio value over 90 days.

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

Monteagle Enhanced Equity  vs.  Sprucegrove International Equi

Monteagle Enhanced Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sprucegrove International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprucegrove International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Monteagle Enhanced and Sprucegrove International

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

The idea behind Monteagle Enhanced Equity and Sprucegrove International Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.