Correlation Between Nebraska Municipal and Eic Value

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

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

Diversification Opportunities for Nebraska Municipal and Eic Value

0.08

Correlation Coefficient

Nebraska Municipal  Eic Value

Significant diversification

The 3 months correlation between Nebraska and Eic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal 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 Nebraska Municipal 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 Nebraska Municipal 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 Nebraska Municipal i.e., Nebraska Municipal and Eic Value go up and down completely randomly.

Pair Corralation between Nebraska Municipal and Eic Value

Assuming the 90 days horizon Nebraska Municipal Fund is expected to under-perform the Eic Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nebraska Municipal Fund is 2.41 times less risky than Eic Value. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Eic Value Fund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,680  in Eic Value Fund on October 22, 2024 and sell it today you would earn a total of  53.00  from holding Eic Value Fund or generate 3.15% return on investment over 90 days.

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

Nebraska Municipal Fund  vs.  Eic Value Fund

Nebraska Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eic Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nebraska Municipal and Eic Value

The main advantage of trading using opposite Nebraska Municipal and Eic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal 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 Nebraska Municipal 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.