Correlation Between Eagle Point and Pimco Corporate

Can any of the company-specific risk be diversified away by investing in both Eagle Point and Pimco Corporate 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 Pimco Corporate 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 Pimco Corporate Income, you can compare the effects of market volatilities on Eagle Point and Pimco Corporate 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 Pimco Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Pimco Corporate.

Diversification Opportunities for Eagle Point and Pimco Corporate

0.2

Correlation Coefficient

Eagle Point  Pimco Corporate

Modest diversification

The 3 months correlation between Eagle and Pimco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate Income 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 Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Eagle Point i.e., Eagle Point and Pimco Corporate go up and down completely randomly.

Pair Corralation between Eagle Point and Pimco Corporate

Considering the 90-day investment horizon Eagle Point Credit is expected to generate 0.71 times more return on investment than Pimco Corporate. However, Eagle Point Credit is 1.41 times less risky than Pimco Corporate. It trades about 0.43 of its potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.24 per unit of risk. If you would invest  987.00  in Eagle Point Credit on February 24, 2024 and sell it today you would earn a total of  40.00  from holding Eagle Point Credit or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  Pimco Corporate Income

Eagle Point Credit

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Eagle Point may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pimco Corporate Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Corporate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Point and Pimco Corporate

The main advantage of trading using opposite Eagle Point and Pimco Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point position performs unexpectedly, Pimco Corporate 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 Pimco Corporate will offset losses from the drop in Pimco Corporate's long position.

The idea behind Eagle Point Credit and Pimco Corporate Income 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.