Correlation Between Power Momentum and Eagle Growth

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

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

Diversification Opportunities for Power Momentum and Eagle Growth

0.94

Correlation Coefficient

Power Momentum  Eagle Growth

Almost no diversification

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

Pair Corralation between Power Momentum and Eagle Growth

Assuming the 90 days horizon Power Momentum Index is expected to generate 1.17 times more return on investment than Eagle Growth. However, Power Momentum is 1.17 times more volatile than Eagle Growth Income. It trades about 0.25 of its potential returns per unit of risk. Eagle Growth Income is currently generating about 0.26 per unit of risk. If you would invest  1,391  in Power Momentum Index on May 4, 2025 and sell it today you would earn a total of  175.00  from holding Power Momentum Index or generate 12.58% return on investment over 90 days.

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

Power Momentum Index  vs.  Eagle Growth Income

Power Momentum Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Momentum Index are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Power Momentum may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Eagle Growth Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Growth Income are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Eagle Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Power Momentum and Eagle Growth

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

The idea behind Power Momentum Index and Eagle Growth Income 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.