Correlation Between Eaton Vance and Alcoa Corp

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Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Alcoa Corp 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 Eaton Vance and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Risk and Alcoa Corp, you can compare the effects of market volatilities on Eaton Vance and Alcoa Corp 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 Eaton Vance with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Alcoa Corp.

Diversification Opportunities for Eaton Vance and Alcoa Corp

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Eaton and Alcoa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Risk and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Eaton Vance 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 Eaton Vance Risk are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Eaton Vance i.e., Eaton Vance and Alcoa Corp go up and down completely randomly.

Pair Corralation between Eaton Vance and Alcoa Corp

Considering the 90-day investment horizon Eaton Vance Risk is expected to generate 0.3 times more return on investment than Alcoa Corp. However, Eaton Vance Risk is 3.36 times less risky than Alcoa Corp. It trades about 0.02 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.02 per unit of risk. If you would invest  775.00  in Eaton Vance Risk on December 29, 2023 and sell it today you would earn a total of  60.00  from holding Eaton Vance Risk or generate 7.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.78%
ValuesDaily Returns

Eaton Vance Risk  vs.  Alcoa Corp

 Performance 
       Timeline  
Eaton Vance Risk 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Risk are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively unfluctuating basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Alcoa Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alcoa Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance and Alcoa Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eaton Vance and Alcoa Corp

The main advantage of trading using opposite Eaton Vance and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.
The idea behind Eaton Vance Risk and Alcoa Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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