Correlation Between Eagle Point and Blackrock Enhanced

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

By analyzing existing cross correlation between Eagle Point Income and Blackrock Enhanced Capital, you can compare the effects of market volatilities on Eagle Point and Blackrock Enhanced 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 Blackrock Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Blackrock Enhanced.

Diversification Opportunities for Eagle Point and Blackrock Enhanced

0.78

Correlation Coefficient

Eagle Point  Blackrock Enhanced

Poor diversification

The 3 months correlation between Eagle and Blackrock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Income and Blackrock Enhanced Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Enhanced 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 Income are associated (or correlated) with Blackrock Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Enhanced has no effect on the direction of Eagle Point i.e., Eagle Point and Blackrock Enhanced go up and down completely randomly.

Pair Corralation between Eagle Point and Blackrock Enhanced

Given the investment horizon of 90 days Eagle Point Income is expected to generate 0.53 times more return on investment than Blackrock Enhanced. However, Eagle Point Income is 1.88 times less risky than Blackrock Enhanced. It trades about 0.14 of its potential returns per unit of risk. Blackrock Enhanced Capital is currently generating about 0.07 per unit of risk. If you would invest  2,370  in Eagle Point Income on September 25, 2024 and sell it today you would earn a total of  33.00  from holding Eagle Point Income or generate 1.39% return on investment over 90 days.

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

Eagle Point Income  vs.  Blackrock Enhanced Capital

Eagle Point Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Enhanced

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Capital are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eagle Point and Blackrock Enhanced

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

The idea behind Eagle Point Income and Blackrock Enhanced Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.