Correlation Between Ab New and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Ab New 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 New 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 New York and Eaton Vance South, you can compare the effects of market volatilities on Ab New 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 New with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab New and Eaton Vance.

Diversification Opportunities for Ab New and Eaton Vance

0.96

Correlation Coefficient

Ab New  Eaton Vance

Almost no diversification

The 3 months correlation between ALNVX and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ab New York and Eaton Vance South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance South and Ab New 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 New York 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 South has no effect on the direction of Ab New i.e., Ab New and Eaton Vance go up and down completely randomly.

Pair Corralation between Ab New and Eaton Vance

Assuming the 90 days horizon Ab New York is expected to generate 1.05 times more return on investment than Eaton Vance. However, Ab New is 1.05 times more volatile than Eaton Vance South. It trades about 0.05 of its potential returns per unit of risk. Eaton Vance South is currently generating about 0.02 per unit of risk. If you would invest  876.00  in Ab New York on October 26, 2024 and sell it today you would earn a total of  49.00  from holding Ab New York or generate 5.59% return on investment over 90 days.

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

Ab New York  vs.  Eaton Vance South

Ab New York

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance South

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance South 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 Ab New and Eaton Vance

The main advantage of trading using opposite Ab New and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab New 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 New York and Eaton Vance South 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.