Correlation Between Pro Blend and Eagle Capital

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

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

Diversification Opportunities for Pro Blend and Eagle Capital

0.8

Correlation Coefficient

Pro Blend  Eagle Capital

Very poor diversification

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

Pair Corralation between Pro Blend and Eagle Capital

Assuming the 90 days horizon Pro Blend is expected to generate 3.16 times less return on investment than Eagle Capital. But when comparing it to its historical volatility, Pro Blend Maximum Term is 1.3 times less risky than Eagle Capital. It trades about 0.1 of its potential returns per unit of risk. Eagle Capital Appreciation is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,626  in Eagle Capital Appreciation on May 5, 2025 and sell it today you would earn a total of  379.00  from holding Eagle Capital Appreciation or generate 14.43% return on investment over 90 days.

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

Pro Blend Maximum Term  vs.  Eagle Capital Appreciation

Pro Blend Maximum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Maximum Term are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pro Blend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eagle Capital Apprec

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Capital Appreciation are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Eagle Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pro Blend and Eagle Capital

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

The idea behind Pro Blend Maximum Term and Eagle Capital Appreciation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.