Correlation Between Davis Real and Eaton Vance

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

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

Diversification Opportunities for Davis Real and Eaton Vance

-0.77

Correlation Coefficient

Davis Real  Eaton Vance

Pay attention - limited upside

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

Pair Corralation between Davis Real and Eaton Vance

Assuming the 90 days horizon Davis Real is expected to generate 1.06 times less return on investment than Eaton Vance. In addition to that, Davis Real is 5.85 times more volatile than Eaton Vance Global. It trades about 0.03 of its total potential returns per unit of risk. Eaton Vance Global is currently generating about 0.16 per unit of volatility. If you would invest  928.00  in Eaton Vance Global on October 22, 2024 and sell it today you would earn a total of  119.00  from holding Eaton Vance Global or generate 12.82% return on investment over 90 days.

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

Davis Real Estate  vs.  Eaton Vance Global

Davis Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Eaton Vance Global

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Global are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Davis Real and Eaton Vance

The main advantage of trading using opposite Davis Real and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Real 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 Davis Real Estate and Eaton Vance Global 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.