Correlation Between Ab Discovery and Eaton Vance

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

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

Diversification Opportunities for Ab Discovery and Eaton Vance

0.65

Correlation Coefficient

Ab Discovery  Eaton Vance

Poor diversification

The 3 months correlation between ABYSX and Eaton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ab Discovery Value and Eaton Vance Richard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Richard and Ab Discovery 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 Ab Discovery Value 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 Richard has no effect on the direction of Ab Discovery i.e., Ab Discovery and Eaton Vance go up and down completely randomly.

Pair Corralation between Ab Discovery and Eaton Vance

Assuming the 90 days horizon Ab Discovery Value is expected to under-perform the Eaton Vance. In addition to that, Ab Discovery is 3.83 times more volatile than Eaton Vance Richard. It trades about -0.18 of its total potential returns per unit of risk. Eaton Vance Richard is currently generating about -0.02 per unit of volatility. If you would invest  1,468  in Eaton Vance Richard on December 2, 2024 and sell it today you would lose (9.00) from holding Eaton Vance Richard or give up 0.61% of portfolio value over 90 days.

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

Ab Discovery Value  vs.  Eaton Vance Richard

Ab Discovery Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Discovery Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Eaton Vance Richard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Richard has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly 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.

Pair Trading with Ab Discovery and Eaton Vance

The main advantage of trading using opposite Ab Discovery and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Discovery 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 Ab Discovery Value and Eaton Vance Richard 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.