Correlation Between Government Securities and Eagle Mid

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

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

Diversification Opportunities for Government Securities and Eagle Mid

-0.24

Correlation Coefficient

Government Securities  Eagle Mid

Very good diversification

The 3 months correlation between Government and Eagle is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund 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 Government Securities 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 Government Securities Fund 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 Government Securities i.e., Government Securities and Eagle Mid go up and down completely randomly.

Pair Corralation between Government Securities and Eagle Mid

Assuming the 90 days horizon Government Securities Fund is expected to generate 0.25 times more return on investment than Eagle Mid. However, Government Securities Fund is 4.03 times less risky than Eagle Mid. It trades about 0.04 of its potential returns per unit of risk. Eagle Mid Cap is currently generating about -0.01 per unit of risk. If you would invest  838.00  in Government Securities Fund on October 4, 2024 and sell it today you would earn a total of  35.00  from holding Government Securities Fund or generate 4.18% return on investment over 90 days.

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

Government Securities Fund  vs.  Eagle Mid Cap

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eagle Mid Cap

Risk-Adjusted Performance

0 of 100

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 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 Government Securities and Eagle Mid

The main advantage of trading using opposite Government Securities and Eagle Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities 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 Government Securities Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.