Correlation Between Alcoa Corp and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp 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 Alcoa Corp and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and Eaton Vance Atlant, you can compare the effects of market volatilities on Alcoa Corp 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 Alcoa Corp with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Eaton Vance.

Diversification Opportunities for Alcoa Corp and Eaton Vance

0.59

Correlation Coefficient

Alcoa Corp  Eaton Vance

Very weak diversification

The 3 months correlation between Alcoa and Eaton is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Eaton Vance Atlant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Atlant and Alcoa Corp 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 Alcoa Corp 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 Atlant has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Eaton Vance go up and down completely randomly.

Pair Corralation between Alcoa Corp and Eaton Vance

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Eaton Vance. In addition to that, Alcoa Corp is 3.97 times more volatile than Eaton Vance Atlant. It trades about -0.01 of its total potential returns per unit of risk. Eaton Vance Atlant is currently generating about 0.06 per unit of volatility. If you would invest  1,462  in Eaton Vance Atlant on October 4, 2024 and sell it today you would earn a total of  366.00  from holding Eaton Vance Atlant or generate 25.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Alcoa Corp  vs.  Eaton Vance Atlant

Alcoa Corp

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Atlant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Atlant has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and Eaton Vance

The main advantage of trading using opposite Alcoa Corp and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.

The idea behind Alcoa Corp and Eaton Vance Atlant 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.