Correlation Between Eagle Point and Mitsubishi Estate

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

Diversification Opportunities for Eagle Point and Mitsubishi Estate

0.09

Correlation Coefficient

Eagle Point  Mitsubishi Estate

Significant diversification

The 3 months correlation between Eagle and Mitsubishi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate 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 Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of Eagle Point i.e., Eagle Point and Mitsubishi Estate go up and down completely randomly.

Pair Corralation between Eagle Point and Mitsubishi Estate

Given the investment horizon of 90 days Eagle Point Credit is expected to generate 0.22 times more return on investment than Mitsubishi Estate. However, Eagle Point Credit is 4.59 times less risky than Mitsubishi Estate. It trades about -0.1 of its potential returns per unit of risk. Mitsubishi Estate Co is currently generating about -0.09 per unit of risk. If you would invest  2,286  in Eagle Point Credit on October 6, 2024 and sell it today you would lose (16.00) from holding Eagle Point Credit or give up 0.7% of portfolio value over 90 days.

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

Eagle Point Credit  vs.  Mitsubishi Estate Co

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 fairly stable fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mitsubishi Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Estate Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eagle Point and Mitsubishi Estate

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

The idea behind Eagle Point Credit and Mitsubishi Estate Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.