Correlation Between EOSDAC and SPX6900

Can any of the company-specific risk be diversified away by investing in both EOSDAC and SPX6900 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 EOSDAC and SPX6900 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOSDAC and SPX6900, you can compare the effects of market volatilities on EOSDAC and SPX6900 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 EOSDAC with a short position of SPX6900. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOSDAC and SPX6900.

Diversification Opportunities for EOSDAC and SPX6900

0.79

Correlation Coefficient

EOSDAC  SPX6900

Poor diversification

The 3 months correlation between EOSDAC and SPX6900 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and SPX6900 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX6900 and EOSDAC 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 EOSDAC are associated (or correlated) with SPX6900. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX6900 has no effect on the direction of EOSDAC i.e., EOSDAC and SPX6900 go up and down completely randomly.

Pair Corralation between EOSDAC and SPX6900

Assuming the 90 days trading horizon EOSDAC is expected to generate 2.92 times less return on investment than SPX6900. But when comparing it to its historical volatility, EOSDAC is 2.6 times less risky than SPX6900. It trades about 0.21 of its potential returns per unit of risk. SPX6900 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  52.00  in SPX6900 on April 20, 2025 and sell it today you would earn a total of  124.00  from holding SPX6900 or generate 238.46% return on investment over 90 days.

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

EOSDAC  vs.  SPX6900

EOSDAC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

SPX6900

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPX6900 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SPX6900 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOSDAC and SPX6900

The main advantage of trading using opposite EOSDAC and SPX6900 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOSDAC position performs unexpectedly, SPX6900 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 SPX6900 will offset losses from the drop in SPX6900's long position.

The idea behind EOSDAC and SPX6900 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.