Correlation Between Swiss Helvetia and Eagle Point

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

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

Diversification Opportunities for Swiss Helvetia and Eagle Point

0.89

Correlation Coefficient

Swiss Helvetia  Eagle Point

Very poor diversification

The 3 months correlation between Swiss and Eagle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Helvetia Closed and Eagle Point Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Income and Swiss Helvetia 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 Swiss Helvetia Closed 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 Income has no effect on the direction of Swiss Helvetia i.e., Swiss Helvetia and Eagle Point go up and down completely randomly.

Pair Corralation between Swiss Helvetia and Eagle Point

Considering the 90-day investment horizon Swiss Helvetia Closed is expected to generate 2.67 times more return on investment than Eagle Point. However, Swiss Helvetia is 2.67 times more volatile than Eagle Point Income. It trades about 0.22 of its potential returns per unit of risk. Eagle Point Income is currently generating about 0.08 per unit of risk. If you would invest  775.00  in Swiss Helvetia Closed on December 1, 2024 and sell it today you would earn a total of  120.00  from holding Swiss Helvetia Closed or generate 15.48% return on investment over 90 days.

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

Swiss Helvetia Closed  vs.  Eagle Point Income

Swiss Helvetia Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Helvetia Closed are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain basic indicators, Swiss Helvetia showed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Point Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Income are ranked lower than 5 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swiss Helvetia and Eagle Point

The main advantage of trading using opposite Swiss Helvetia and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Helvetia 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 Swiss Helvetia Closed and Eagle Point Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.