Correlation Between Pimco Corporate and Eagle Point

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

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

Diversification Opportunities for Pimco Corporate and Eagle Point

-0.4

Correlation Coefficient

Pimco Corporate  Eagle Point

Very good diversification

The 3 months correlation between Pimco and Eagle is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income 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 Pimco Corporate 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 Pimco Corporate Income 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 Pimco Corporate i.e., Pimco Corporate and Eagle Point go up and down completely randomly.

Pair Corralation between Pimco Corporate and Eagle Point

Considering the 90-day investment horizon Pimco Corporate Income is expected to generate 0.72 times more return on investment than Eagle Point. However, Pimco Corporate Income is 1.39 times less risky than Eagle Point. It trades about 0.22 of its potential returns per unit of risk. Eagle Point Credit is currently generating about -0.1 per unit of risk. If you would invest  1,316  in Pimco Corporate Income on September 3, 2024 and sell it today you would earn a total of  90.00  from holding Pimco Corporate Income or generate 6.84% return on investment over 90 days.

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

Pimco Corporate Income  vs.  Eagle Point Credit

Pimco Corporate Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of very inconsistent fundamental indicators, Pimco Corporate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 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 Pimco Corporate and Eagle Point

The main advantage of trading using opposite Pimco Corporate and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Corporate 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 Pimco Corporate Income 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.