Correlation Between Micron Technology and Eagle Point

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

Diversification Opportunities for Micron Technology and Eagle Point

MicronEagleDiversified AwayMicronEagleDiversified Away100%
0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Micron and Eagle is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Eagle Point go up and down completely randomly.

Pair Corralation between Micron Technology and Eagle Point

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Eagle Point. In addition to that, Micron Technology is 12.67 times more volatile than Eagle Point Credit. It trades about -0.01 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about -0.02 per unit of volatility. If you would invest  2,271  in Eagle Point Credit on September 22, 2024 and sell it today you would lose (11.00) from holding Eagle Point Credit or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Micron Technology  vs.  Eagle Point Credit

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 510152025
JavaScript chart by amCharts 3.21.15MU ECCV
       Timeline  
Micron Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec859095100105110115
Eagle Point Credit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec22.5522.622.6522.722.7522.822.8522.922.95

Micron Technology and Eagle Point Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.1-9.06-6.03-2.990.03.026.19.1712.25 1234
JavaScript chart by amCharts 3.21.15MU ECCV
       Returns  

Pair Trading with Micron Technology and Eagle Point

The main advantage of trading using opposite Micron Technology and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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 Micron Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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