Correlation Between Eaton Vance and Baron Emerging

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

By analyzing existing cross correlation between Eaton Vance Income and Baron Emerging Markets, you can compare the effects of market volatilities on Eaton Vance and Baron Emerging 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 Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Baron Emerging.

Diversification Opportunities for Eaton Vance and Baron Emerging

0.54

Correlation Coefficient

Eaton Vance  Baron Emerging

Very weak diversification

The 3 months correlation between Eaton and Baron is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Income and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets 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 Income are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Eaton Vance i.e., Eaton Vance and Baron Emerging go up and down completely randomly.

Pair Corralation between Eaton Vance and Baron Emerging

Assuming the 90 days horizon Eaton Vance is expected to generate 4.83 times less return on investment than Baron Emerging. But when comparing it to its historical volatility, Eaton Vance Income is 4.04 times less risky than Baron Emerging. It trades about 0.06 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,519  in Baron Emerging Markets on November 29, 2024 and sell it today you would earn a total of  55.00  from holding Baron Emerging Markets or generate 3.62% return on investment over 90 days.

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

Eaton Vance Income  vs.  Baron Emerging Markets

Eaton Vance Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Emerging Markets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Baron Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Baron Emerging

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

The idea behind Eaton Vance Income and Baron Emerging Markets 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.