Correlation Between Eaton Vance and Fidus Investment

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

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

Diversification Opportunities for Eaton Vance and Fidus Investment

0.6

Correlation Coefficient

Eaton Vance  Fidus Investment

Poor diversification

The 3 months correlation between Eaton and Fidus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment Corp 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 National are associated (or correlated) with Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Eaton Vance i.e., Eaton Vance and Fidus Investment go up and down completely randomly.

Pair Corralation between Eaton Vance and Fidus Investment

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.05 times less return on investment than Fidus Investment. But when comparing it to its historical volatility, Eaton Vance National is 1.69 times less risky than Fidus Investment. It trades about 0.09 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,033  in Fidus Investment Corp on December 27, 2024 and sell it today you would earn a total of  63.00  from holding Fidus Investment Corp or generate 3.1% return on investment over 90 days.

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

Eaton Vance National  vs.  Fidus Investment Corp

Eaton Vance National

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance National are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Fidus Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eaton Vance and Fidus Investment

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

The idea behind Eaton Vance National and Fidus Investment Corp 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.