Correlation Between Eagle Point and National Rural
Can any of the company-specific risk be diversified away by investing in both Eagle Point and National Rural 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 Eagle Point and National Rural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Point Credit and National Rural Utilities, you can compare the effects of market volatilities on Eagle Point and National Rural 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 Eagle Point with a short position of National Rural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and National Rural.
Diversification Opportunities for Eagle Point and National Rural
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eagle and National is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and National Rural Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Rural Utilities and Eagle Point 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 Eagle Point Credit are associated (or correlated) with National Rural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Rural Utilities has no effect on the direction of Eagle Point i.e., Eagle Point and National Rural go up and down completely randomly.
Pair Corralation between Eagle Point and National Rural
Given the investment horizon of 90 days Eagle Point Credit is expected to generate 1.05 times more return on investment than National Rural. However, Eagle Point is 1.05 times more volatile than National Rural Utilities. It trades about 0.05 of its potential returns per unit of risk. National Rural Utilities is currently generating about 0.05 per unit of risk. If you would invest 2,104 in Eagle Point Credit on August 28, 2024 and sell it today you would earn a total of 382.00 from holding Eagle Point Credit or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Point Credit vs. National Rural Utilities
Performance |
| Timeline |
| Eagle Point Credit |
| National Rural Utilities |
Eagle Point and National Rural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Point and National Rural
The main advantage of trading using opposite Eagle Point and National Rural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point position performs unexpectedly, National Rural 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 National Rural will offset losses from the drop in National Rural's long position.The idea behind Eagle Point Credit and National Rural Utilities 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.| National Rural vs. DBA Sempra 5750 | National Rural vs. CMS Energy Corp | National Rural vs. American Financial Group | National Rural vs. Maiden Holdings North |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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