Correlation Between Hyundai and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Hyundai 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 Hyundai and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and Eagle Point Credit, you can compare the effects of market volatilities on Hyundai 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 Hyundai with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Eagle Point.
Diversification Opportunities for Hyundai and Eagle Point
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyundai and Eagle is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor 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 Hyundai 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 Hyundai Motor 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 Hyundai i.e., Hyundai and Eagle Point go up and down completely randomly.
Pair Corralation between Hyundai and Eagle Point
Assuming the 90 days horizon Hyundai Motor Co is expected to under-perform the Eagle Point. In addition to that, Hyundai is 6.48 times more volatile than Eagle Point Credit. It trades about -0.02 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about 0.15 per unit of volatility. If you would invest 2,296 in Eagle Point Credit on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Eagle Point Credit or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hyundai Motor Co vs. Eagle Point Credit
Performance |
| Timeline |
| Hyundai Motor |
| Eagle Point Credit |
Hyundai and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Eagle Point
The main advantage of trading using opposite Hyundai and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai 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.The idea behind Hyundai Motor Co and Eagle Point Credit 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.| Eagle Point vs. Legacy Education | Eagle Point vs. Apple Inc | Eagle Point vs. NVIDIA | Eagle Point vs. Microsoft |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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