Correlation Between Ladenburg Thalmann and Eagle Point

Can any of the company-specific risk be diversified away by investing in both Ladenburg Thalmann 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 Ladenburg Thalmann and Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ladenburg Thalmann Financial and Eagle Point Credit, you can compare the effects of market volatilities on Ladenburg Thalmann 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 Ladenburg Thalmann with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladenburg Thalmann and Eagle Point.

Diversification Opportunities for Ladenburg Thalmann and Eagle Point

0.19

Correlation Coefficient

Ladenburg Thalmann  Eagle Point

Average diversification

The 3 months correlation between Ladenburg and Eagle is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ladenburg Thalmann Financial 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 Ladenburg Thalmann 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 Ladenburg Thalmann Financial 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 Ladenburg Thalmann i.e., Ladenburg Thalmann and Eagle Point go up and down completely randomly.

Pair Corralation between Ladenburg Thalmann and Eagle Point

If you would invest  2,428  in Eagle Point Credit on September 18, 2024 and sell it today you would earn a total of  27.00  from holding Eagle Point Credit or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Ladenburg Thalmann Financial  vs.  Eagle Point Credit

Ladenburg Thalmann

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladenburg Thalmann Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ladenburg Thalmann is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Eagle Point Credit

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ladenburg Thalmann and Eagle Point

The main advantage of trading using opposite Ladenburg Thalmann and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladenburg Thalmann 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 Ladenburg Thalmann Financial 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.

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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.