Correlation Between Pimco Income and Eagle Point

Can any of the company-specific risk be diversified away by investing in both Pimco Income 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 Income 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 Income Strategy and Eagle Point Credit, you can compare the effects of market volatilities on Pimco Income 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 Income with a short position of Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Eagle Point.

Diversification Opportunities for Pimco Income and Eagle Point

-0.1

Correlation Coefficient

Pimco Income  Eagle Point

Good diversification

The 3 months correlation between Pimco and Eagle is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy 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 Income 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 Income Strategy 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 Income i.e., Pimco Income and Eagle Point go up and down completely randomly.

Pair Corralation between Pimco Income and Eagle Point

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 0.55 times more return on investment than Eagle Point. However, Pimco Income Strategy is 1.82 times less risky than Eagle Point. It trades about -0.01 of its potential returns per unit of risk. Eagle Point Credit is currently generating about -0.14 per unit of risk. If you would invest  753.00  in Pimco Income Strategy on September 3, 2024 and sell it today you would lose (1.00) from holding Pimco Income Strategy or give up 0.13% of portfolio value over 90 days.

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

Pimco Income Strategy  vs.  Eagle Point Credit

Pimco Income Strategy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 Income and Eagle Point

The main advantage of trading using opposite Pimco Income and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income 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 Income Strategy 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.