Correlation Between Eagle Small and Global Gold

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

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

Diversification Opportunities for Eagle Small and Global Gold

-0.65

Correlation Coefficient

Eagle Small  Global Gold

Excellent diversification

The 3 months correlation between Eagle and Global is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund and Eagle Small 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 Small Cap are associated (or correlated) with Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Eagle Small i.e., Eagle Small and Global Gold go up and down completely randomly.

Pair Corralation between Eagle Small and Global Gold

Assuming the 90 days horizon Eagle Small Cap is expected to under-perform the Global Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eagle Small Cap is 1.19 times less risky than Global Gold. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Global Gold Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,163  in Global Gold Fund on December 29, 2024 and sell it today you would earn a total of  421.00  from holding Global Gold Fund or generate 36.2% return on investment over 90 days.

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

Eagle Small Cap  vs.  Global Gold Fund

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.

Global Gold Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Gold Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Small and Global Gold

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

The idea behind Eagle Small Cap and Global Gold 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.