Correlation Between T Rowe and Eagle Point
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Eagle Point Credit, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Eagle Point.
Diversification Opportunities for T Rowe and Eagle Point
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RRTLX and Eagle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Eagle Point go up and down completely randomly.
Pair Corralation between T Rowe and Eagle Point
Assuming the 90 days horizon T Rowe is expected to generate 9.12 times less return on investment than Eagle Point. But when comparing it to its historical volatility, T Rowe Price is 2.13 times less risky than Eagle Point. It trades about 0.01 of its potential returns per unit of risk. Eagle Point Credit is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,337 in Eagle Point Credit on August 25, 2024 and sell it today you would earn a total of 19.00 from holding Eagle Point Credit or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
T Rowe Price vs. Eagle Point Credit
Performance |
| Timeline |
| T Rowe Price |
| Eagle Point Credit |
T Rowe and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Eagle Point
The main advantage of trading using opposite T Rowe and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.| T Rowe vs. Ab Municipal Bond | T Rowe vs. Schwab Treasury Inflation | T Rowe vs. Aqr Managed Futures | T Rowe vs. Loomis Sayles Inflation |
| Eagle Point vs. Eagle Point Income | Eagle Point vs. Oxford Lane Capital | Eagle Point vs. Eagle Point Credit | Eagle Point vs. Eagle Point 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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