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 Floating 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

0.41

Correlation Coefficient

Eaton Vance  Invesco Senior

Very weak diversification

The 3 months correlation between Eaton and Invesco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Floating 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 Floating 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 Floating is expected to under-perform the Invesco Senior. But the stock apears to be less risky and, when comparing its historical volatility, Eaton Vance Floating is 2.98 times less risky than Invesco Senior. The stock trades about -0.09 of its potential returns per unit of risk. The Invesco Senior Income is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  382.00  in Invesco Senior Income on December 27, 2024 and sell it today you would lose (14.00) from holding Invesco Senior Income or give up 3.66% of portfolio value over 90 days.

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

Eaton Vance Floating  vs.  Invesco Senior Income

Eaton Vance Floating

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Floating has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Invesco Senior Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Senior Income has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, Invesco Senior is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 Floating 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.