Correlation Between Georgia Power and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Georgia Power 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 Georgia Power and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Power Co and Eagle Point Credit, you can compare the effects of market volatilities on Georgia Power 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 Georgia Power with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Power and Eagle Point.
Diversification Opportunities for Georgia Power and Eagle Point
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Georgia and Eagle is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Power Co 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 Georgia Power 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 Georgia Power Co 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 Georgia Power i.e., Georgia Power and Eagle Point go up and down completely randomly.
Pair Corralation between Georgia Power and Eagle Point
Given the investment horizon of 90 days Georgia Power Co is expected to under-perform the Eagle Point. In addition to that, Georgia Power is 1.72 times more volatile than Eagle Point Credit. It trades about -0.03 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about 0.11 per unit of volatility. If you would invest 2,357 in Eagle Point Credit on September 2, 2024 and sell it today you would earn a total of 123.00 from holding Eagle Point Credit or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Power Co vs. Eagle Point Credit
Performance |
| Timeline |
| Georgia Power |
| Eagle Point Credit |
Georgia Power and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Power and Eagle Point
The main advantage of trading using opposite Georgia Power and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Power 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.| Georgia Power vs. Southern Co | Georgia Power vs. Entergy Arkansas LLC | Georgia Power vs. DTE Energy Co | Georgia Power vs. Entergy New Orleans |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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