Correlation Between Bank of America and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Bank of America and Eagle Point 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 Bank of America and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Eagle Point Credit, you can compare the effects of market volatilities on Bank of America and Eagle Point 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 Bank of America with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Eagle Point.
Diversification Opportunities for Bank of America and Eagle Point
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Eagle is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit and Bank of America 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 Bank of America are associated (or correlated) with Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of Bank of America i.e., Bank of America and Eagle Point go up and down completely randomly.
Pair Corralation between Bank of America and Eagle Point
Considering the 90-day investment horizon Bank of America is expected to generate 2.14 times more return on investment than Eagle Point. However, Bank of America is 2.14 times more volatile than Eagle Point Credit. It trades about 0.29 of its potential returns per unit of risk. Eagle Point Credit is currently generating about -0.15 per unit of risk. If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Eagle Point Credit
Performance |
| Timeline |
| Bank of America |
| Eagle Point Credit |
Bank of America and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Eagle Point
The main advantage of trading using opposite Bank of America and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Eagle Point 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 Point will offset losses from the drop in Eagle Point's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Eagle Point vs. Cornerstone Strategic Return | Eagle Point vs. Cornerstone Strategic Value | Eagle Point vs. Oxford Square Capital | Eagle Point vs. Guggenheim Strategic Opportunities |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |