Correlation Between Eic Value and State Street

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

Diversification Opportunities for Eic Value and State Street

-0.46

Correlation Coefficient

Eic Value  State Street

Very good diversification

The 3 months correlation between Eic and State is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and State Street Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Core 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Core has no effect on the direction of Eic Value i.e., Eic Value and State Street go up and down completely randomly.

Pair Corralation between Eic Value and State Street

Assuming the 90 days horizon Eic Value Fund is expected to generate 0.28 times more return on investment than State Street. However, Eic Value Fund is 3.55 times less risky than State Street. It trades about 0.2 of its potential returns per unit of risk. State Street Core is currently generating about -0.12 per unit of risk. If you would invest  1,656  in Eic Value Fund on December 18, 2024 and sell it today you would earn a total of  139.00  from holding Eic Value Fund or generate 8.39% return on investment over 90 days.

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

Eic Value Fund  vs.  State Street Core

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 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eic Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

State Street Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street Core 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Eic Value and State Street

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

The idea behind Eic Value Fund and State Street Core 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.