Correlation Between Europac Gold and Eic Value

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

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

Diversification Opportunities for Europac Gold and Eic Value

0.8

Correlation Coefficient

Europac Gold  Eic Value

Very poor diversification

The 3 months correlation between Europac and Eic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Eic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eic Value Fund and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Eic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eic Value Fund has no effect on the direction of Europac Gold i.e., Europac Gold and Eic Value go up and down completely randomly.

Pair Corralation between Europac Gold and Eic Value

Assuming the 90 days horizon Europac Gold Fund is expected to generate 2.35 times more return on investment than Eic Value. However, Europac Gold is 2.35 times more volatile than Eic Value Fund. It trades about 0.25 of its potential returns per unit of risk. Eic Value Fund is currently generating about 0.18 per unit of risk. If you would invest  926.00  in Europac Gold Fund on December 20, 2024 and sell it today you would earn a total of  245.00  from holding Europac Gold Fund or generate 26.46% return on investment over 90 days.

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

Europac Gold Fund  vs.  Eic Value Fund

Europac Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold showed solid returns over the last few months and may actually be approaching a breakup point.

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 14 (%) 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.

Pair Trading with Europac Gold and Eic Value

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

The idea behind Europac Gold Fund and Eic Value Fund 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.