Correlation Between Eagle Small and High Yield

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

Diversification Opportunities for Eagle Small and High Yield

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eagle and High is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Eagle Small i.e., Eagle Small and High Yield go up and down completely randomly.

Pair Corralation between Eagle Small and High Yield

Assuming the 90 days horizon Eagle Small Cap is expected to under-perform the High Yield. In addition to that, Eagle Small is 6.62 times more volatile than High Yield Fund. It trades about -0.21 of its total potential returns per unit of risk. High Yield Fund is currently generating about -0.13 per unit of volatility. If you would invest  778.00  in High Yield Fund on September 28, 2024 and sell it today you would lose (4.00) from holding High Yield Fund or give up 0.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Eagle Small Cap  vs.  High Yield Fund

 Performance 
       Timeline  
Eagle Small Cap 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Eagle Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
High Yield Fund 

Risk-Adjusted Performance

0 of 100

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

Eagle Small and High Yield Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eagle Small and High Yield

The main advantage of trading using opposite Eagle Small and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Small position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.
The idea behind Eagle Small Cap and High Yield 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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