Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Eaton Vance 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 Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance National and Eaton Vance Tax, you can compare the effects of market volatilities on Eaton Vance and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Eaton Vance.
Diversification Opportunities for Eaton Vance and Eaton Vance
The 3 months correlation between Eaton and Eaton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 National are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Eaton Vance i.e., Eaton Vance and Eaton Vance go up and down completely randomly.
Pair Corralation between Eaton Vance and Eaton Vance
Considering the 90-day investment horizon Eaton Vance is expected to generate 14.49 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Eaton Vance National is 1.66 times less risky than Eaton Vance. It trades about 0.01 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,326 in Eaton Vance Tax on March 6, 2024 and sell it today you would earn a total of 43.00 from holding Eaton Vance Tax or generate 3.24% return on investment over 90 days.
Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.