Correlation Between Eagle Point and Georgia Power

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

Diversification Opportunities for Eagle Point and Georgia Power

-0.33

Correlation Coefficient

Eagle Point  Georgia Power

Very good diversification

The 3 months correlation between Eagle and Georgia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Georgia Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Georgia Power 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 Georgia Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Georgia Power has no effect on the direction of Eagle Point i.e., Eagle Point and Georgia Power go up and down completely randomly.

Pair Corralation between Eagle Point and Georgia Power

Given the investment horizon of 90 days Eagle Point Credit is expected to generate 0.57 times more return on investment than Georgia Power. However, Eagle Point Credit is 1.75 times less risky than Georgia Power. It trades about 0.06 of its potential returns per unit of risk. Georgia Power Co is currently generating about -0.1 per unit of risk. If you would invest  2,372  in Eagle Point Credit on September 19, 2024 and sell it today you would earn a total of  66.00  from holding Eagle Point Credit or generate 2.78% return on investment over 90 days.

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

Eagle Point Credit  vs.  Georgia Power 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 strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Georgia Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Georgia Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking 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 Georgia Power

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

The idea behind Eagle Point Credit and Georgia Power 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.