Correlation Between Babcock Wilcox and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox 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 Babcock Wilcox and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and Eagle Point Credit, you can compare the effects of market volatilities on Babcock Wilcox 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 Babcock Wilcox with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Eagle Point.
Diversification Opportunities for Babcock Wilcox and Eagle Point
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Babcock and Eagle is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises 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 Babcock Wilcox 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 Babcock Wilcox Enterprises 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 Babcock Wilcox i.e., Babcock Wilcox and Eagle Point go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Eagle Point
Given the investment horizon of 90 days Babcock Wilcox is expected to generate 2.22 times less return on investment than Eagle Point. In addition to that, Babcock Wilcox is 10.56 times more volatile than Eagle Point Credit. It trades about 0.01 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about 0.29 per unit of volatility. If you would invest 2,280 in Eagle Point Credit on November 27, 2024 and sell it today you would earn a total of 21.00 from holding Eagle Point Credit or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Eagle Point Credit
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Eagle Point Credit |
Babcock Wilcox and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Eagle Point
The main advantage of trading using opposite Babcock Wilcox and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox 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.| Babcock Wilcox vs. Rambler Metals and | Babcock Wilcox vs. Torm PLC Class | Babcock Wilcox vs. Black Mammoth Metals | Babcock Wilcox vs. Skillful Craftsman Education |
| Eagle Point vs. Eagle Point Credit | Eagle Point vs. Eagle Point Credit | Eagle Point vs. Oxford Lane Capital | Eagle Point vs. Babcock Wilcox Enterprises |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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