Correlation Between Eagle Growth and Scout E

Can any of the company-specific risk be diversified away by investing in both Eagle Growth and Scout E 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 Eagle Growth and Scout E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Growth Income and Scout E Plus, you can compare the effects of market volatilities on Eagle Growth and Scout E 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 Eagle Growth with a short position of Scout E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Growth and Scout E.

Diversification Opportunities for Eagle Growth and Scout E

0.01

Correlation Coefficient

Eagle Growth  Scout E

Significant diversification

The 3 months correlation between Eagle and Scout is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Growth Income and Scout E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout E Plus and Eagle Growth 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 Eagle Growth Income are associated (or correlated) with Scout E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout E Plus has no effect on the direction of Eagle Growth i.e., Eagle Growth and Scout E go up and down completely randomly.

Pair Corralation between Eagle Growth and Scout E

Assuming the 90 days horizon Eagle Growth Income is expected to under-perform the Scout E. In addition to that, Eagle Growth is 2.53 times more volatile than Scout E Plus. It trades about -0.01 of its total potential returns per unit of risk. Scout E Plus is currently generating about 0.14 per unit of volatility. If you would invest  2,894  in Scout E Plus on December 20, 2024 and sell it today you would earn a total of  81.00  from holding Scout E Plus or generate 2.8% return on investment over 90 days.

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

Eagle Growth Income  vs.  Scout E Plus

Eagle Growth Income

Risk-Adjusted Performance

Very Weak

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

Scout E Plus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scout E Plus are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Scout E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Growth and Scout E

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

The idea behind Eagle Growth Income and Scout E Plus 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.