Correlation Between Ford and Eagle Point

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Eagle Point Credit, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Eagle Point.

Diversification Opportunities for Ford and Eagle Point

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ford and Eagle is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Eagle Point go up and down completely randomly.

Pair Corralation between Ford and Eagle Point

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Eagle Point. In addition to that, Ford is 8.43 times more volatile than Eagle Point Credit. It trades about -0.05 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about 0.12 per unit of volatility. If you would invest  2,381  in Eagle Point Credit on September 26, 2024 and sell it today you would earn a total of  106.30  from holding Eagle Point Credit or generate 4.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.21%
ValuesDaily Returns

Ford Motor  vs.  Eagle Point Credit

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Eagle Point Credit 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ford and Eagle Point Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Eagle Point

The main advantage of trading using opposite Ford and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.
The idea behind Ford Motor and Eagle Point Credit 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets