Correlation Between Eagle Small and Lebenthal Lisanti

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

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

Diversification Opportunities for Eagle Small and Lebenthal Lisanti

0.94

Correlation Coefficient

Eagle Small  Lebenthal Lisanti

Almost no diversification

The 3 months correlation between Eagle and Lebenthal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small and Eagle Small 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 Small Cap are associated (or correlated) with Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of Eagle Small i.e., Eagle Small and Lebenthal Lisanti go up and down completely randomly.

Pair Corralation between Eagle Small and Lebenthal Lisanti

Assuming the 90 days horizon Eagle Small Cap is expected to under-perform the Lebenthal Lisanti. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eagle Small Cap is 1.32 times less risky than Lebenthal Lisanti. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Lebenthal Lisanti Small is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,177  in Lebenthal Lisanti Small on September 14, 2024 and sell it today you would earn a total of  62.00  from holding Lebenthal Lisanti Small or generate 2.85% return on investment over 90 days.

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

Eagle Small Cap  vs.  Lebenthal Lisanti Small

Eagle Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Eagle Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lebenthal Lisanti Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lebenthal Lisanti Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lebenthal Lisanti showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Small and Lebenthal Lisanti

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

The idea behind Eagle Small Cap and Lebenthal Lisanti Small 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.