Correlation Between Eic Value and Leader Total

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

Diversification Opportunities for Eic Value and Leader Total

-0.15

Correlation Coefficient

Eic Value  Leader Total

Good diversification

The 3 months correlation between Eic and Leader is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Leader Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Total Return 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 Leader Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Total Return has no effect on the direction of Eic Value i.e., Eic Value and Leader Total go up and down completely randomly.

Pair Corralation between Eic Value and Leader Total

Assuming the 90 days horizon Eic Value Fund is expected to under-perform the Leader Total. In addition to that, Eic Value is 27.7 times more volatile than Leader Total Return. It trades about -0.18 of its total potential returns per unit of risk. Leader Total Return is currently generating about -0.33 per unit of volatility. If you would invest  1,166  in Leader Total Return on October 12, 2024 and sell it today you would lose (2.00) from holding Leader Total Return or give up 0.17% of portfolio value over 90 days.

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

Eic Value Fund  vs.  Leader Total Return

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.

Leader Total Return

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Total Return are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leader Total 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 Leader Total

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

The idea behind Eic Value Fund and Leader Total Return 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.