Correlation Between Arbor Realty and Eaton Vance

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

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

Diversification Opportunities for Arbor Realty and Eaton Vance

-0.54

Correlation Coefficient

Arbor Realty  Eaton Vance

Excellent diversification

The 3 months correlation between Arbor and Eaton is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Eaton Vance Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Senior and Arbor Realty 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 Arbor Realty Trust 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 Senior has no effect on the direction of Arbor Realty i.e., Arbor Realty and Eaton Vance go up and down completely randomly.

Pair Corralation between Arbor Realty and Eaton Vance

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the Eaton Vance. In addition to that, Arbor Realty is 2.19 times more volatile than Eaton Vance Senior. It trades about -0.15 of its total potential returns per unit of risk. Eaton Vance Senior is currently generating about -0.04 per unit of volatility. If you would invest  1,299  in Eaton Vance Senior on October 9, 2024 and sell it today you would lose (6.00) from holding Eaton Vance Senior or give up 0.46% of portfolio value over 90 days.

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

Arbor Realty Trust  vs.  Eaton Vance Senior

Arbor Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Eaton Vance Senior

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Senior are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Arbor Realty and Eaton Vance

The main advantage of trading using opposite Arbor Realty and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty 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 Arbor Realty Trust and Eaton Vance Senior 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.