Correlation Between Eaton Vance and Invesco Senior

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Invesco Senior 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 Invesco Senior 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 Invesco Senior Income, you can compare the effects of market volatilities on Eaton Vance and Invesco Senior 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 Invesco Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Invesco Senior.

Diversification Opportunities for Eaton Vance and Invesco Senior

0.86

Correlation Coefficient

Eaton Vance  Invesco Senior

Very poor diversification

The 3 months correlation between Eaton and Invesco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and Invesco Senior Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Income 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 Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and Invesco Senior go up and down completely randomly.

Pair Corralation between Eaton Vance and Invesco Senior

Considering the 90-day investment horizon Eaton Vance is expected to generate 5.26 times less return on investment than Invesco Senior. But when comparing it to its historical volatility, Eaton Vance Senior is 1.59 times less risky than Invesco Senior. It trades about 0.05 of its potential returns per unit of risk. Invesco Senior Income is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Invesco Senior Income on December 2, 2024 and sell it today you would earn a total of  27.00  from holding Invesco Senior Income or generate 6.96% return on investment over 90 days.

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

Eaton Vance Senior  vs.  Invesco Senior Income

Eaton Vance Senior

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Senior are ranked lower than 3 (%) 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.

Invesco Senior Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Senior Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively unfluctuating basic indicators, Invesco Senior may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eaton Vance and Invesco Senior

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

The idea behind Eaton Vance Senior and Invesco Senior 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.