Correlation Between Aquagold International and Eaton Vance

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

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

Diversification Opportunities for Aquagold International and Eaton Vance

0.8

Correlation Coefficient

Aquagold International  Eaton Vance

Very poor diversification

The 3 months correlation between Aquagold and Eaton is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National and Aquagold International 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 Aquagold International 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 National has no effect on the direction of Aquagold International i.e., Aquagold International and Eaton Vance go up and down completely randomly.

Pair Corralation between Aquagold International and Eaton Vance

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Eaton Vance. In addition to that, Aquagold International is 14.74 times more volatile than Eaton Vance National. It trades about -0.08 of its total potential returns per unit of risk. Eaton Vance National is currently generating about 0.02 per unit of volatility. If you would invest  1,636  in Eaton Vance National on October 13, 2024 and sell it today you would earn a total of  17.00  from holding Eaton Vance National or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.31%
Values	Daily Returns

Aquagold International  vs.  Eaton Vance National

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Eaton Vance National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aquagold International and Eaton Vance

The main advantage of trading using opposite Aquagold International and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and Eaton Vance National 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.