Correlation Between Eagle Point and Guggenheim Strategic

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

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

Diversification Opportunities for Eagle Point and Guggenheim Strategic

-0.5

Correlation Coefficient

Eagle Point  Guggenheim Strategic

Very good diversification

The 3 months correlation between Eagle and Guggenheim is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic and Eagle Point 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 Eagle Point Credit are associated (or correlated) with Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Eagle Point i.e., Eagle Point and Guggenheim Strategic go up and down completely randomly.

Pair Corralation between Eagle Point and Guggenheim Strategic

Considering the 90-day investment horizon Eagle Point Credit is expected to under-perform the Guggenheim Strategic. In addition to that, Eagle Point is 1.85 times more volatile than Guggenheim Strategic Opportunities. It trades about -0.04 of its total potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.17 per unit of volatility. If you would invest  1,466  in Guggenheim Strategic Opportunities on December 29, 2024 and sell it today you would earn a total of  88.00  from holding Guggenheim Strategic Opportunities or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  Guggenheim Strategic Opportuni

Eagle Point Credit

Risk-Adjusted Performance

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 rather sound fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Guggenheim Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eagle Point and Guggenheim Strategic

The main advantage of trading using opposite Eagle Point and Guggenheim Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point position performs unexpectedly, Guggenheim Strategic 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 Guggenheim Strategic will offset losses from the drop in Guggenheim Strategic's long position.

The idea behind Eagle Point Credit and Guggenheim Strategic Opportunities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.