Correlation Between Eagle Point and Apple

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

Diversification Opportunities for Eagle Point and Apple

-0.22

Correlation Coefficient

Eagle Point  Apple

Very good diversification

The 3 months correlation between Eagle and Apple is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Eagle Point i.e., Eagle Point and Apple go up and down completely randomly.

Pair Corralation between Eagle Point and Apple

Given the investment horizon of 90 days Eagle Point Credit is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Point Credit is 2.41 times less risky than Apple. The stock trades about -0.02 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  22,253  in Apple Inc on September 12, 2024 and sell it today you would earn a total of  2,524  from holding Apple Inc or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  Apple Inc

Eagle Point Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Point Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eagle Point and Apple

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

The idea behind Eagle Point Credit and Apple Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..