Correlation Between Davenport Small and Eventide Multi-asset

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

By analyzing existing cross correlation between Davenport Small Cap and Eventide Multi Asset Income, you can compare the effects of market volatilities on Davenport Small and Eventide Multi-asset 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 Davenport Small with a short position of Eventide Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davenport Small and Eventide Multi-asset.

Diversification Opportunities for Davenport Small and Eventide Multi-asset

0.77

Correlation Coefficient

Davenport Small  Eventide Multi-asset

Poor diversification

The 3 months correlation between Davenport and Eventide is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap and Eventide Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Multi Asset and Davenport 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 Davenport Small Cap are associated (or correlated) with Eventide Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Multi Asset has no effect on the direction of Davenport Small i.e., Davenport Small and Eventide Multi-asset go up and down completely randomly.

Pair Corralation between Davenport Small and Eventide Multi-asset

Assuming the 90 days horizon Davenport Small Cap is expected to under-perform the Eventide Multi-asset. In addition to that, Davenport Small is 1.79 times more volatile than Eventide Multi Asset Income. It trades about -0.14 of its total potential returns per unit of risk. Eventide Multi Asset Income is currently generating about -0.01 per unit of volatility. If you would invest  1,409  in Eventide Multi Asset Income on December 30, 2024 and sell it today you would lose (9.00) from holding Eventide Multi Asset Income or give up 0.64% of portfolio value over 90 days.

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

Davenport Small Cap  vs.  Eventide Multi Asset Income

Davenport Small Cap

Risk-Adjusted Performance

Very Weak

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

Eventide Multi Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eventide Multi Asset Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Eventide Multi-asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davenport Small and Eventide Multi-asset

The main advantage of trading using opposite Davenport Small and Eventide Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davenport Small position performs unexpectedly, Eventide Multi-asset 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 Eventide Multi-asset will offset losses from the drop in Eventide Multi-asset's long position.

The idea behind Davenport Small Cap and Eventide Multi Asset Income 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.