Correlation Between Eagle Mid and Conestoga Smid

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

By analyzing existing cross correlation between Eagle Mid Cap and Conestoga Smid Cap, you can compare the effects of market volatilities on Eagle Mid and Conestoga Smid 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 Mid with a short position of Conestoga Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mid and Conestoga Smid.

Diversification Opportunities for Eagle Mid and Conestoga Smid

0.98

Correlation Coefficient

Eagle Mid  Conestoga Smid

Almost no diversification

The 3 months correlation between Eagle and Conestoga is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mid Cap and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap and Eagle Mid 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 Mid Cap are associated (or correlated) with Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Eagle Mid i.e., Eagle Mid and Conestoga Smid go up and down completely randomly.

Pair Corralation between Eagle Mid and Conestoga Smid

Assuming the 90 days horizon Eagle Mid Cap is expected to generate 0.97 times more return on investment than Conestoga Smid. However, Eagle Mid Cap is 1.03 times less risky than Conestoga Smid. It trades about 0.34 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about 0.2 per unit of risk. If you would invest  7,824  in Eagle Mid Cap on September 9, 2024 and sell it today you would earn a total of  1,769  from holding Eagle Mid Cap or generate 22.61% return on investment over 90 days.

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

Eagle Mid Cap  vs.  Conestoga Smid Cap

Eagle Mid Cap

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Mid Cap are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eagle Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Conestoga Smid Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Smid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Conestoga Smid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eagle Mid and Conestoga Smid

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

The idea behind Eagle Mid Cap and Conestoga Smid Cap 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.