Correlation Between Mid Cap and Eagle Mid

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Eagle Mid Cap, you can compare the effects of market volatilities on Mid Cap and Eagle Mid 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 Mid Cap with a short position of Eagle Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Eagle Mid.

Diversification Opportunities for Mid Cap and Eagle Mid

0.83

Correlation Coefficient

Mid Cap  Eagle Mid

Very poor diversification

The 3 months correlation between Mid and Eagle is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Eagle Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mid Cap and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Eagle Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mid Cap has no effect on the direction of Mid Cap i.e., Mid Cap and Eagle Mid go up and down completely randomly.

Pair Corralation between Mid Cap and Eagle Mid

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 0.69 times more return on investment than Eagle Mid. However, Mid Cap 15x Strategy is 1.44 times less risky than Eagle Mid. It trades about -0.07 of its potential returns per unit of risk. Eagle Mid Cap is currently generating about -0.14 per unit of risk. If you would invest  13,124  in Mid Cap 15x Strategy on December 19, 2024 and sell it today you would lose (929.00) from holding Mid Cap 15x Strategy or give up 7.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  Eagle Mid Cap

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy 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.

Eagle Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mid Cap and Eagle Mid

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

The idea behind Mid Cap 15x Strategy and Eagle Mid 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.