Correlation Between Clough Global and Eagle Point

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

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

Diversification Opportunities for Clough Global and Eagle Point

-0.39

Correlation Coefficient

Clough Global  Eagle Point

Very good diversification

The 3 months correlation between Clough and Eagle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Clough Global Allocation and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit and Clough Global 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 Clough Global Allocation are associated (or correlated) with Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of Clough Global i.e., Clough Global and Eagle Point go up and down completely randomly.

Pair Corralation between Clough Global and Eagle Point

Considering the 90-day investment horizon Clough Global Allocation is expected to generate 0.65 times more return on investment than Eagle Point. However, Clough Global Allocation is 1.53 times less risky than Eagle Point. It trades about 0.12 of its potential returns per unit of risk. Eagle Point Credit is currently generating about -0.06 per unit of risk. If you would invest  527.00  in Clough Global Allocation on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Clough Global Allocation or generate 5.12% return on investment over 90 days.

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

Clough Global Allocation  vs.  Eagle Point Credit

Clough Global Allocation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clough Global Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable essential indicators, Clough Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Clough Global and Eagle Point

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

The idea behind Clough Global Allocation and Eagle Point Credit 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.