Correlation Between Gabelli Multimedia and Eagle Point

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

Diversification Opportunities for Gabelli Multimedia and Eagle Point

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Gabelli and Eagle is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia 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 Gabelli Multimedia 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 The Gabelli Multimedia 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 Gabelli Multimedia i.e., Gabelli Multimedia and Eagle Point go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Eagle Point

Assuming the 90 days trading horizon Gabelli Multimedia is expected to generate 2.41 times less return on investment than Eagle Point. In addition to that, Gabelli Multimedia is 2.5 times more volatile than Eagle Point Credit. It trades about 0.02 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  2,271  in Eagle Point Credit on September 26, 2024 and sell it today you would earn a total of  216.00  from holding Eagle Point Credit or generate 9.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy48.19%
ValuesDaily Returns

The Gabelli Multimedia  vs.  Eagle Point Credit

 Performance 
       Timeline  
The Gabelli Multimedia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Gabelli Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gabelli Multimedia and Eagle Point Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gabelli Multimedia and Eagle Point

The main advantage of trading using opposite Gabelli Multimedia and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Multimedia 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 The Gabelli Multimedia 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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