Correlation Between Carlyle and Eaton Vance

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

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

Diversification Opportunities for Carlyle and Eaton Vance

0.77

Correlation Coefficient

Carlyle  Eaton Vance

Poor diversification

The 3 months correlation between Carlyle and Eaton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Eaton Vance Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Senior and Carlyle 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 Carlyle Group 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 Senior has no effect on the direction of Carlyle i.e., Carlyle and Eaton Vance go up and down completely randomly.

Pair Corralation between Carlyle and Eaton Vance

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 5.07 times more return on investment than Eaton Vance. However, Carlyle is 5.07 times more volatile than Eaton Vance Senior. It trades about 0.25 of its potential returns per unit of risk. Eaton Vance Senior is currently generating about 0.15 per unit of risk. If you would invest  3,786  in Carlyle Group on September 4, 2024 and sell it today you would earn a total of  1,492  from holding Carlyle Group or generate 39.41% return on investment over 90 days.

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

Carlyle Group  vs.  Eaton Vance Senior

Carlyle Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Senior

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Senior are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Carlyle and Eaton Vance

The main advantage of trading using opposite Carlyle and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group and Eaton Vance Senior 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.