Correlation Between Main Street and Eagle Pointome

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

By analyzing existing cross correlation between Main Street Capital and Eagle Pointome, you can compare the effects of market volatilities on Main Street and Eagle Pointome 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 Main Street with a short position of Eagle Pointome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Eagle Pointome.

Diversification Opportunities for Main Street and Eagle Pointome

0.54

Correlation Coefficient

Main Street  Eagle Pointome

Very weak diversification

The 3 months correlation between Main and Eagle is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Eagle Pointome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pointome and Main Street 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 Main Street Capital are associated (or correlated) with Eagle Pointome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pointome has no effect on the direction of Main Street i.e., Main Street and Eagle Pointome go up and down completely randomly.

Pair Corralation between Main Street and Eagle Pointome

Given the investment horizon of 90 days Main Street Capital is expected to generate 0.79 times more return on investment than Eagle Pointome. However, Main Street Capital is 1.27 times less risky than Eagle Pointome. It trades about 0.62 of its potential returns per unit of risk. Eagle Pointome is currently generating about -0.06 per unit of risk. If you would invest  5,043  in Main Street Capital on September 2, 2024 and sell it today you would earn a total of  504.00  from holding Main Street Capital or generate 9.99% return on investment over 90 days.

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

Main Street Capital  vs.  Eagle Pointome

Main Street Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Pointome

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Pointome are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Eagle Pointome is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Main Street and Eagle Pointome

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

The idea behind Main Street Capital and Eagle Pointome 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 Stocks Directory module to find actively traded stocks across global markets.