Correlation Between Eaton Vance and Alpha Architect

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

Diversification Opportunities for Eaton Vance and Alpha Architect

-0.49

Correlation Coefficient

Eaton Vance  Alpha Architect

Very good diversification

The 3 months correlation between Eaton and Alpha is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and Alpha Architect High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect High 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 Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect High has no effect on the direction of Eaton Vance i.e., Eaton Vance and Alpha Architect go up and down completely randomly.

Pair Corralation between Eaton Vance and Alpha Architect

Considering the 90-day investment horizon Eaton Vance Enhanced is expected to under-perform the Alpha Architect. In addition to that, Eaton Vance is 4.18 times more volatile than Alpha Architect High. It trades about -0.11 of its total potential returns per unit of risk. Alpha Architect High is currently generating about 0.11 per unit of volatility. If you would invest  2,223  in Alpha Architect High on December 27, 2024 and sell it today you would earn a total of  38.00  from holding Alpha Architect High or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eaton Vance Enhanced  vs.  Alpha Architect High

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 latest conflicting performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Alpha Architect High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Alpha Architect is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eaton Vance and Alpha Architect

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

The idea behind Eaton Vance Enhanced and Alpha Architect High 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.