Correlation Between Eagle Point and WhiteHorse Finance

Can any of the company-specific risk be diversified away by investing in both Eagle Point and WhiteHorse Finance 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 WhiteHorse Finance 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 WhiteHorse Finance, you can compare the effects of market volatilities on Eagle Point and WhiteHorse Finance 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 WhiteHorse Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and WhiteHorse Finance.

Diversification Opportunities for Eagle Point and WhiteHorse Finance

0.67

Correlation Coefficient

Eagle Point  WhiteHorse Finance

Poor diversification

The 3 months correlation between Eagle and WhiteHorse is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and WhiteHorse Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteHorse Finance 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 WhiteHorse Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteHorse Finance has no effect on the direction of Eagle Point i.e., Eagle Point and WhiteHorse Finance go up and down completely randomly.

Pair Corralation between Eagle Point and WhiteHorse Finance

Considering the 90-day investment horizon Eagle Point Credit is expected to generate 0.68 times more return on investment than WhiteHorse Finance. However, Eagle Point Credit is 1.46 times less risky than WhiteHorse Finance. It trades about -0.04 of its potential returns per unit of risk. WhiteHorse Finance is currently generating about -0.09 per unit of risk. If you would invest  932.00  in Eagle Point Credit on September 13, 2024 and sell it today you would lose (19.00) from holding Eagle Point Credit or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  WhiteHorse Finance

Eagle Point Credit

Risk-Adjusted Performance

0 of 100

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.

WhiteHorse Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WhiteHorse Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Eagle Point and WhiteHorse Finance

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

The idea behind Eagle Point Credit and WhiteHorse Finance 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.