Correlation Between Microsoft and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Eagle Point Credit, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Eagle Point.
Diversification Opportunities for Microsoft and Eagle Point
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Eagle is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Eagle Point go up and down completely randomly.
Pair Corralation between Microsoft and Eagle Point
Given the investment horizon of 90 days Microsoft is expected to generate 1.8 times more return on investment than Eagle Point. However, Microsoft is 1.8 times more volatile than Eagle Point Credit. It trades about -0.04 of its potential returns per unit of risk. Eagle Point Credit is currently generating about -0.16 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Eagle Point Credit
Performance |
| Timeline |
| Microsoft |
| Eagle Point Credit |
Microsoft and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Eagle Point
The main advantage of trading using opposite Microsoft and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Eagle Point vs. Cornerstone Strategic Return | Eagle Point vs. Cornerstone Strategic Value | Eagle Point vs. Oxford Square Capital | Eagle Point vs. Guggenheim Strategic Opportunities |
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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