Correlation Between DMY Squared and Eaton Vance

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

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

Diversification Opportunities for DMY Squared and Eaton Vance

0.55

Correlation Coefficient

DMY Squared  Eaton Vance

Very weak diversification

The 3 months correlation between DMY and Eaton is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology 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 DMY Squared 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 dMY Squared Technology 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 DMY Squared i.e., DMY Squared and Eaton Vance go up and down completely randomly.

Pair Corralation between DMY Squared and Eaton Vance

Given the investment horizon of 90 days dMY Squared Technology is expected to generate 0.74 times more return on investment than Eaton Vance. However, dMY Squared Technology is 1.36 times less risky than Eaton Vance. It trades about -0.05 of its potential returns per unit of risk. Eaton Vance Senior is currently generating about -0.05 per unit of risk. If you would invest  1,070  in dMY Squared Technology on October 8, 2024 and sell it today you would lose (4.00) from holding dMY Squared Technology or give up 0.37% of portfolio value over 90 days.

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

dMY Squared Technology  vs.  Eaton Vance Senior

dMY Squared Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Senior

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Senior are ranked lower than 11 (%) 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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DMY Squared and Eaton Vance

The main advantage of trading using opposite DMY Squared and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared 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 dMY Squared Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.