Correlation Between Liberty All and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Liberty All 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 Liberty All and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty All Star and Eagle Point Income, you can compare the effects of market volatilities on Liberty All 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 Liberty All with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty All and Eagle Point.
Diversification Opportunities for Liberty All and Eagle Point
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liberty and Eagle is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Liberty All Star 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 Liberty All 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 Liberty All Star 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 Liberty All i.e., Liberty All and Eagle Point go up and down completely randomly.
Pair Corralation between Liberty All and Eagle Point
Considering the 90-day investment horizon Liberty All Star is expected to generate 3.85 times more return on investment than Eagle Point. However, Liberty All is 3.85 times more volatile than Eagle Point Income. It trades about 0.12 of its potential returns per unit of risk. Eagle Point Income is currently generating about 0.19 per unit of risk. If you would invest 637.00 in Liberty All Star on August 31, 2024 and sell it today you would earn a total of 93.00 from holding Liberty All Star or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty All Star vs. Eagle Point Income
Performance |
| Timeline |
| Liberty All Star |
| Eagle Point Income |
Liberty All and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty All and Eagle Point
The main advantage of trading using opposite Liberty All and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty All 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.| Liberty All vs. Adams Diversified Equity | Liberty All vs. BlackRock Science and | Liberty All vs. Virtus Allianzgi Artificial | Liberty All vs. Royce Value Closed |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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