Correlation Between Eic Value and Large Cap

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

Diversification Opportunities for Eic Value and Large Cap

0.0

Correlation Coefficient

Eic Value  Large Cap

Pay attention - limited upside

The 3 months correlation between Eic and Large is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 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 Large Cap Growth has no effect on the direction of Eic Value i.e., Eic Value and Large Cap go up and down completely randomly.

Pair Corralation between Eic Value and Large Cap

Assuming the 90 days horizon Eic Value is expected to generate 2.5 times less return on investment than Large Cap. But when comparing it to its historical volatility, Eic Value Fund is 1.37 times less risky than Large Cap. It trades about 0.06 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,740  in Large Cap Growth Profund on October 10, 2024 and sell it today you would earn a total of  1,893  from holding Large Cap Growth Profund or generate 69.09% return on investment over 90 days.

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

Eic Value Fund  vs.  Large Cap Growth Profund

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.

Large Cap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large Cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eic Value and Large Cap

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

The idea behind Eic Value Fund and Large Cap Growth Profund 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.