Correlation Between Eagle Small and Oklahoma Municipal

Can any of the company-specific risk be diversified away by investing in both Eagle Small and Oklahoma Municipal 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 Oklahoma Municipal 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 Oklahoma Municipal Fund, you can compare the effects of market volatilities on Eagle Small and Oklahoma Municipal 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 Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Small and Oklahoma Municipal.

Diversification Opportunities for Eagle Small and Oklahoma Municipal

-0.02

Correlation Coefficient

Eagle Small  Oklahoma Municipal

Good diversification

The 3 months correlation between Eagle and Oklahoma is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal 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 Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of Eagle Small i.e., Eagle Small and Oklahoma Municipal go up and down completely randomly.

Pair Corralation between Eagle Small and Oklahoma Municipal

Assuming the 90 days horizon Eagle Small Cap is expected to generate 5.08 times more return on investment than Oklahoma Municipal. However, Eagle Small is 5.08 times more volatile than Oklahoma Municipal Fund. It trades about 0.07 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.13 per unit of risk. If you would invest  2,584  in Eagle Small Cap on September 18, 2024 and sell it today you would earn a total of  33.00  from holding Eagle Small Cap or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Eagle Small Cap  vs.  Oklahoma Municipal Fund

Eagle Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Small Cap are ranked lower than 8 (%) 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.

Oklahoma Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eagle Small and Oklahoma Municipal

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

The idea behind Eagle Small Cap and Oklahoma Municipal Fund 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.