Correlation Between Cardinal Small and Eaton Vance

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

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

Diversification Opportunities for Cardinal Small and Eaton Vance

0.44

Correlation Coefficient

Cardinal Small  Eaton Vance

Very weak diversification

The 3 months correlation between Cardinal and Eaton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Eaton Vance Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Multi and Cardinal Small 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 Cardinal Small Cap 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 Multi has no effect on the direction of Cardinal Small i.e., Cardinal Small and Eaton Vance go up and down completely randomly.

Pair Corralation between Cardinal Small and Eaton Vance

Assuming the 90 days horizon Cardinal Small is expected to generate 7.27 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Cardinal Small Cap is 12.83 times less risky than Eaton Vance. It trades about 0.13 of its potential returns per unit of risk. Eaton Vance Multi Strategy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  985.00  in Eaton Vance Multi Strategy on September 22, 2024 and sell it today you would earn a total of  5.00  from holding Eaton Vance Multi Strategy or generate 0.51% return on investment over 90 days.

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

Cardinal Small Cap  vs.  Eaton Vance Multi Strategy

Cardinal Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Multi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Multi Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary 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 Cardinal Small and Eaton Vance

The main advantage of trading using opposite Cardinal Small and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Small 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 Cardinal Small Cap and Eaton Vance Multi Strategy 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.