Correlation Between Eic Value and Vanguard Large-cap

Can any of the company-specific risk be diversified away by investing in both Eic Value and Vanguard Large-cap 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 Eic Value and Vanguard Large-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eic Value Fund and Vanguard Large Cap Index, you can compare the effects of market volatilities on Eic Value and Vanguard Large-cap 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 Eic Value with a short position of Vanguard Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Vanguard Large-cap.

Diversification Opportunities for Eic Value and Vanguard Large-cap

-0.08

Correlation Coefficient

Eic Value  Vanguard Large-cap

Good diversification

The 3 months correlation between Eic and Vanguard is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Vanguard Large Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Large Cap and Eic Value 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 Eic Value Fund are associated (or correlated) with Vanguard Large-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Large Cap has no effect on the direction of Eic Value i.e., Eic Value and Vanguard Large-cap go up and down completely randomly.

Pair Corralation between Eic Value and Vanguard Large-cap

Assuming the 90 days horizon Eic Value Fund is expected to generate 0.69 times more return on investment than Vanguard Large-cap. However, Eic Value Fund is 1.46 times less risky than Vanguard Large-cap. It trades about 0.16 of its potential returns per unit of risk. Vanguard Large Cap Index is currently generating about -0.08 per unit of risk. If you would invest  1,681  in Eic Value Fund on December 21, 2024 and sell it today you would earn a total of  115.00  from holding Eic Value Fund or generate 6.84% return on investment over 90 days.

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

Eic Value Fund  vs.  Vanguard Large Cap Index

Eic Value Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eic Value Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Eic Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vanguard Large Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eic Value and Vanguard Large-cap

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

The idea behind Eic Value Fund and Vanguard Large Cap Index 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.