Correlation Between Invesco High and Eaton Vance

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

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

Diversification Opportunities for Invesco High and Eaton Vance

0.82

Correlation Coefficient

Invesco High  Eaton Vance

Very poor diversification

The 3 months correlation between Invesco and Eaton is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and Eaton Vance Tabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tabs and Invesco High 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 Invesco High Yield 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 Tabs has no effect on the direction of Invesco High i.e., Invesco High and Eaton Vance go up and down completely randomly.

Pair Corralation between Invesco High and Eaton Vance

Assuming the 90 days horizon Invesco High is expected to generate 1.03 times less return on investment than Eaton Vance. In addition to that, Invesco High is 1.67 times more volatile than Eaton Vance Tabs. It trades about 0.09 of its total potential returns per unit of risk. Eaton Vance Tabs is currently generating about 0.16 per unit of volatility. If you would invest  991.00  in Eaton Vance Tabs on December 21, 2024 and sell it today you would earn a total of  15.00  from holding Eaton Vance Tabs or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Invesco High Yield  vs.  Eaton Vance Tabs

Invesco High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Tabs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tabs are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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 Invesco High and Eaton Vance

The main advantage of trading using opposite Invesco High and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High 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 Invesco High Yield and Eaton Vance Tabs 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.