Correlation Between Eaton Vance and Nuveen Credit

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

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

Diversification Opportunities for Eaton Vance and Nuveen Credit

0.35

Correlation Coefficient

Eaton Vance  Nuveen Credit

Weak diversification

The 3 months correlation between Eaton and Nuveen is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and Nuveen Credit Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Credit Strategies and Eaton Vance 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 Eaton Vance Senior are associated (or correlated) with Nuveen Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Credit Strategies has no effect on the direction of Eaton Vance i.e., Eaton Vance and Nuveen Credit go up and down completely randomly.

Pair Corralation between Eaton Vance and Nuveen Credit

Considering the 90-day investment horizon Eaton Vance Senior is expected to generate 0.77 times more return on investment than Nuveen Credit. However, Eaton Vance Senior is 1.3 times less risky than Nuveen Credit. It trades about -0.12 of its potential returns per unit of risk. Nuveen Credit Strategies is currently generating about -0.1 per unit of risk. If you would invest  1,276  in Eaton Vance Senior on December 27, 2024 and sell it today you would lose (44.00) from holding Eaton Vance Senior or give up 3.45% of portfolio value over 90 days.

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

Eaton Vance Senior  vs.  Nuveen Credit Strategies

Eaton Vance Senior

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Senior has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nuveen Credit Strategies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Credit Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Nuveen Credit is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eaton Vance and Nuveen Credit

The main advantage of trading using opposite Eaton Vance and Nuveen Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Nuveen Credit 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 Nuveen Credit will offset losses from the drop in Nuveen Credit's long position.

The idea behind Eaton Vance Senior and Nuveen Credit Strategies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.