Correlation Between Eaton Vance and Invesco Pennsylvania

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

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

Diversification Opportunities for Eaton Vance and Invesco Pennsylvania

0.64

Correlation Coefficient

Eaton Vance  Invesco Pennsylvania

Poor diversification

The 3 months correlation between Eaton and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance New and Invesco Pennsylvania Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Pennsylvania 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 New are associated (or correlated) with Invesco Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Pennsylvania has no effect on the direction of Eaton Vance i.e., Eaton Vance and Invesco Pennsylvania go up and down completely randomly.

Pair Corralation between Eaton Vance and Invesco Pennsylvania

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.54 times less return on investment than Invesco Pennsylvania. In addition to that, Eaton Vance is 1.36 times more volatile than Invesco Pennsylvania Value. It trades about 0.06 of its total potential returns per unit of risk. Invesco Pennsylvania Value is currently generating about 0.12 per unit of volatility. If you would invest  1,092  in Invesco Pennsylvania Value on September 4, 2024 and sell it today you would earn a total of  36.00  from holding Invesco Pennsylvania Value or generate 3.3% return on investment over 90 days.

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

Eaton Vance New  vs.  Invesco Pennsylvania Value

Eaton Vance New

Risk-Adjusted Performance

4 of 100

Insignificant

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

Invesco Pennsylvania

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Pennsylvania Value are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco Pennsylvania is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eaton Vance and Invesco Pennsylvania

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

The idea behind Eaton Vance New and Invesco Pennsylvania Value 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.