Correlation Between Eagle Capital and Pace Large

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

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

Diversification Opportunities for Eagle Capital and Pace Large

0.99

Correlation Coefficient

Eagle Capital  Pace Large

No risk reduction

The 3 months correlation between Eagle and Pace is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Capital Appreciation and Pace Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Growth and Eagle Capital 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 Capital Appreciation are associated (or correlated) with Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Growth has no effect on the direction of Eagle Capital i.e., Eagle Capital and Pace Large go up and down completely randomly.

Pair Corralation between Eagle Capital and Pace Large

Assuming the 90 days horizon Eagle Capital Appreciation is expected to generate 1.18 times more return on investment than Pace Large. However, Eagle Capital is 1.18 times more volatile than Pace Large Growth. It trades about 0.21 of its potential returns per unit of risk. Pace Large Growth is currently generating about 0.19 per unit of risk. If you would invest  5,543  in Eagle Capital Appreciation on September 12, 2024 and sell it today you would earn a total of  727.00  from holding Eagle Capital Appreciation or generate 13.12% return on investment over 90 days.

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

Eagle Capital Appreciation  vs.  Pace Large Growth

Eagle Capital Apprec

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Capital Appreciation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eagle Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pace Large Growth

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Large Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pace Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eagle Capital and Pace Large

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

The idea behind Eagle Capital Appreciation and Pace Large Growth 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.