Correlation Between Tradeweb Markets and Eagle Point

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

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

Diversification Opportunities for Tradeweb Markets and Eagle Point

0.42

Correlation Coefficient

Tradeweb Markets  Eagle Point

Very weak diversification

The 3 months correlation between Tradeweb and Eagle is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Eagle Point go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Eagle Point

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 4.5 times more return on investment than Eagle Point. However, Tradeweb Markets is 4.5 times more volatile than Eagle Point Credit. It trades about 0.1 of its potential returns per unit of risk. Eagle Point Credit is currently generating about 0.19 per unit of risk. If you would invest  13,481  in Tradeweb Markets on December 27, 2024 and sell it today you would earn a total of  1,145  from holding Tradeweb Markets or generate 8.49% return on investment over 90 days.

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

Tradeweb Markets  vs.  Eagle Point Credit

Tradeweb Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eagle Point Credit

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. 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 Tradeweb Markets and Eagle Point

The main advantage of trading using opposite Tradeweb Markets and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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 Tradeweb Markets 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.