Correlation Between Western Asset and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Eagle Point Income, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Eagle Point.
Diversification Opportunities for Western Asset and Eagle Point
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Eagle is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Eagle Point Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Income and Western Asset 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 Western Asset High 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 Income has no effect on the direction of Western Asset i.e., Western Asset and Eagle Point go up and down completely randomly.
Pair Corralation between Western Asset and Eagle Point
Considering the 90-day investment horizon Western Asset High is expected to generate 2.27 times more return on investment than Eagle Point. However, Western Asset is 2.27 times more volatile than Eagle Point Income. It trades about 0.06 of its potential returns per unit of risk. Eagle Point Income is currently generating about 0.06 per unit of risk. If you would invest 391.00 in Western Asset High on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset High or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Eagle Point Income
Performance |
| Timeline |
| Western Asset High |
| Eagle Point Income |
Western Asset and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Eagle Point
The main advantage of trading using opposite Western Asset and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance Municipal | Western Asset vs. DTF Tax Free | Western Asset vs. HUMANA INC |
| Eagle Point vs. Eagle Point Credit | Eagle Point vs. Eagle Point Credit | Eagle Point vs. Oxford Lane Capital | Eagle Point vs. OFS Credit |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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