Correlation Between Eaton Vance and Invesco CurrencyShares

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

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

Diversification Opportunities for Eaton Vance and Invesco CurrencyShares

-0.09

Correlation Coefficient

Eaton Vance  Invesco CurrencyShares

Good diversification

The 3 months correlation between Eaton and Invesco is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and Invesco CurrencyShares British in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares 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 Enhanced are associated (or correlated) with Invesco CurrencyShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CurrencyShares has no effect on the direction of Eaton Vance i.e., Eaton Vance and Invesco CurrencyShares go up and down completely randomly.

Pair Corralation between Eaton Vance and Invesco CurrencyShares

Considering the 90-day investment horizon Eaton Vance Enhanced is expected to generate 2.12 times more return on investment than Invesco CurrencyShares. However, Eaton Vance is 2.12 times more volatile than Invesco CurrencyShares British. It trades about 0.01 of its potential returns per unit of risk. Invesco CurrencyShares British is currently generating about 0.01 per unit of risk. If you would invest  2,314  in Eaton Vance Enhanced on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Eaton Vance Enhanced or generate 0.0% return on investment over 90 days.

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

Eaton Vance Enhanced  vs.  Invesco CurrencyShares British

Eaton Vance Enhanced

Risk-Adjusted Performance

Very Weak

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

Invesco CurrencyShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco CurrencyShares British has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco CurrencyShares 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 Invesco CurrencyShares

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

The idea behind Eaton Vance Enhanced and Invesco CurrencyShares British 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.