Correlation Between OFS Credit and Eagle Point

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

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

Diversification Opportunities for OFS Credit and Eagle Point

0.43

Correlation Coefficient

OFS Credit  Eagle Point

Very weak diversification

The 3 months correlation between OFS and Eagle is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit Company, 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 OFS Credit 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 OFS Credit Company, 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 OFS Credit i.e., OFS Credit and Eagle Point go up and down completely randomly.

Pair Corralation between OFS Credit and Eagle Point

Assuming the 90 days horizon OFS Credit Company, is expected to generate 1.05 times more return on investment than Eagle Point. However, OFS Credit is 1.05 times more volatile than Eagle Point Credit. It trades about 0.2 of its potential returns per unit of risk. Eagle Point Credit is currently generating about 0.11 per unit of risk. If you would invest  2,425  in OFS Credit Company, on September 26, 2024 and sell it today you would earn a total of  75.00  from holding OFS Credit Company, or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

OFS Credit Company,  vs.  Eagle Point Credit

OFS Credit ,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit Company, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OFS Credit is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Eagle Point Credit

Risk-Adjusted Performance

8 of 100

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.

Pair Trading with OFS Credit and Eagle Point

The main advantage of trading using opposite OFS Credit and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit 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 OFS Credit Company, 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.