Correlation Between Eagle Capital and Eagle Small

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

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

Diversification Opportunities for Eagle Capital and Eagle Small

0.92

Correlation Coefficient

Eagle Capital  Eagle Small

Almost no diversification

The 3 months correlation between Eagle and Eagle is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Capital Appreciation and Eagle Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Small Cap and Eagle Capital 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 Capital Appreciation are associated (or correlated) with Eagle Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Small Cap has no effect on the direction of Eagle Capital i.e., Eagle Capital and Eagle Small go up and down completely randomly.

Pair Corralation between Eagle Capital and Eagle Small

Assuming the 90 days horizon Eagle Capital Appreciation is expected to under-perform the Eagle Small. In addition to that, Eagle Capital is 1.1 times more volatile than Eagle Small Cap. It trades about -0.11 of its total potential returns per unit of risk. Eagle Small Cap is currently generating about -0.08 per unit of volatility. If you would invest  2,051  in Eagle Small Cap on December 29, 2024 and sell it today you would lose (146.00) from holding Eagle Small Cap or give up 7.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Eagle Capital Appreciation  vs.  Eagle Small Cap

Eagle Capital Apprec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Capital Appreciation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Eagle Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Eagle Capital and Eagle Small

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

The idea behind Eagle Capital Appreciation and Eagle Small 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.