Correlation Between Eagle Point and RiverNorthDoubleLine
Can any of the company-specific risk be diversified away by investing in both Eagle Point and RiverNorthDoubleLine 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 Eagle Point and RiverNorthDoubleLine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Point Credit and RiverNorthDoubleLine Strategic Opportunity, you can compare the effects of market volatilities on Eagle Point and RiverNorthDoubleLine 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 Eagle Point with a short position of RiverNorthDoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and RiverNorthDoubleLine.
Diversification Opportunities for Eagle Point and RiverNorthDoubleLine
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and RiverNorthDoubleLine is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and RiverNorthDoubleLine Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorthDoubleLine and Eagle Point 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 Eagle Point Credit are associated (or correlated) with RiverNorthDoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorthDoubleLine has no effect on the direction of Eagle Point i.e., Eagle Point and RiverNorthDoubleLine go up and down completely randomly.
Pair Corralation between Eagle Point and RiverNorthDoubleLine
Considering the 90-day investment horizon Eagle Point is expected to generate 1.0 times less return on investment than RiverNorthDoubleLine. But when comparing it to its historical volatility, Eagle Point Credit is 1.31 times less risky than RiverNorthDoubleLine. It trades about 0.43 of its potential returns per unit of risk. RiverNorthDoubleLine Strategic Opportunity is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 815.00 in RiverNorthDoubleLine Strategic Opportunity on February 24, 2024 and sell it today you would earn a total of 33.00 from holding RiverNorthDoubleLine Strategic Opportunity or generate 4.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Eagle Point Credit vs. RiverNorthDoubleLine Strategic
Performance |
Timeline |
Eagle Point Credit |
RiverNorthDoubleLine |
Eagle Point and RiverNorthDoubleLine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eagle Point and RiverNorthDoubleLine
The main advantage of trading using opposite Eagle Point and RiverNorthDoubleLine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point position performs unexpectedly, RiverNorthDoubleLine 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 RiverNorthDoubleLine will offset losses from the drop in RiverNorthDoubleLine's long position.Eagle Point vs. Invesco High Income | Eagle Point vs. Eaton Vance National | Eagle Point vs. Federated Premier Municipal | Eagle Point vs. AllianzGI Convertible Income |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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