Correlation Between Eaton Vance and NATIONAL

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

Diversification Opportunities for Eaton Vance and NATIONAL

-0.73

Correlation Coefficient

Eaton Vance  NATIONAL

Pay attention - limited upside

The 3 months correlation between Eaton and NATIONAL is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS 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 NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of Eaton Vance i.e., Eaton Vance and NATIONAL go up and down completely randomly.

Pair Corralation between Eaton Vance and NATIONAL

Considering the 90-day investment horizon Eaton Vance Enhanced is expected to generate 0.94 times more return on investment than NATIONAL. However, Eaton Vance Enhanced is 1.07 times less risky than NATIONAL. It trades about 0.26 of its potential returns per unit of risk. NATIONAL RURAL UTILS is currently generating about -0.04 per unit of risk. If you would invest  2,063  in Eaton Vance Enhanced on September 3, 2024 and sell it today you would earn a total of  286.00  from holding Eaton Vance Enhanced or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

Eaton Vance Enhanced  vs.  NATIONAL RURAL UTILS

Eaton Vance Enhanced

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Enhanced are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Eaton Vance unveiled solid returns over the last few months and may actually be approaching a breakup point.

NATIONAL RURAL UTILS

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Eaton Vance Enhanced and NATIONAL RURAL UTILS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.