Correlation Between Eic Value and Bts Managed

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

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

Diversification Opportunities for Eic Value and Bts Managed

0.79

Correlation Coefficient

Eic Value  Bts Managed

Poor diversification

The 3 months correlation between Eic and Bts is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Bts Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bts Managed Income and Eic Value 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 Eic Value Fund are associated (or correlated) with Bts Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bts Managed Income has no effect on the direction of Eic Value i.e., Eic Value and Bts Managed go up and down completely randomly.

Pair Corralation between Eic Value and Bts Managed

Assuming the 90 days horizon Eic Value is expected to generate 2.64 times less return on investment than Bts Managed. In addition to that, Eic Value is 2.81 times more volatile than Bts Managed Income. It trades about 0.01 of its total potential returns per unit of risk. Bts Managed Income is currently generating about 0.11 per unit of volatility. If you would invest  965.00  in Bts Managed Income on September 18, 2024 and sell it today you would earn a total of  13.00  from holding Bts Managed Income or generate 1.35% return on investment over 90 days.

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

Eic Value Fund  vs.  Bts Managed Income

Eic Value Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eic Value Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Bts Managed Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bts Managed Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bts Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eic Value and Bts Managed

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

The idea behind Eic Value Fund and Bts Managed Income 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.