Correlation Between Eagle Mid and Csjxx

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

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

Diversification Opportunities for Eagle Mid and Csjxx

-0.77

Correlation Coefficient

Eagle Mid  Csjxx

Pay attention - limited upside

The 3 months correlation between Eagle and Csjxx is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mid Cap and Csjxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Csjxx and Eagle Mid 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 Mid Cap are associated (or correlated) with Csjxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Csjxx has no effect on the direction of Eagle Mid i.e., Eagle Mid and Csjxx go up and down completely randomly.

Pair Corralation between Eagle Mid and Csjxx

Assuming the 90 days horizon Eagle Mid is expected to generate 28.68 times less return on investment than Csjxx. But when comparing it to its historical volatility, Eagle Mid Cap is 41.83 times less risky than Csjxx. It trades about 0.1 of its potential returns per unit of risk. Csjxx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  494.00  in Csjxx on September 29, 2024 and sell it today you would lose (394.00) from holding Csjxx or give up 79.76% of portfolio value over 90 days.

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

Eagle Mid Cap  vs.  Csjxx

Eagle Mid Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Mid Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eagle Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Csjxx

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Csjxx are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Csjxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Mid and Csjxx

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

The idea behind Eagle Mid Cap and Csjxx 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.