Correlation Between Eic Value and Multi-index 2020

Can any of the company-specific risk be diversified away by investing in both Eic Value and Multi-index 2020 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 Multi-index 2020 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 Multi Index 2020 Lifetime, you can compare the effects of market volatilities on Eic Value and Multi-index 2020 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 Multi-index 2020. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Multi-index 2020.

Diversification Opportunities for Eic Value and Multi-index 2020

0.64

Correlation Coefficient

Eic Value  Multi-index 2020

Poor diversification

The 3 months correlation between Eic and Multi-index is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Multi Index 2020 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2020 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 Multi-index 2020. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2020 has no effect on the direction of Eic Value i.e., Eic Value and Multi-index 2020 go up and down completely randomly.

Pair Corralation between Eic Value and Multi-index 2020

Assuming the 90 days horizon Eic Value Fund is expected to generate 0.93 times more return on investment than Multi-index 2020. However, Eic Value Fund is 1.08 times less risky than Multi-index 2020. It trades about -0.16 of its potential returns per unit of risk. Multi Index 2020 Lifetime is currently generating about -0.34 per unit of risk. If you would invest  1,732  in Eic Value Fund on October 9, 2024 and sell it today you would lose (41.00) from holding Eic Value Fund or give up 2.37% of portfolio value over 90 days.

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

Eic Value Fund  vs.  Multi Index 2020 Lifetime

Eic Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Multi Index 2020

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Index 2020 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multi-index 2020 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 Multi-index 2020

The main advantage of trading using opposite Eic Value and Multi-index 2020 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value position performs unexpectedly, Multi-index 2020 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 Multi-index 2020 will offset losses from the drop in Multi-index 2020's long position.

The idea behind Eic Value Fund and Multi Index 2020 Lifetime 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.