Correlation Between Eaton Vance and Focus Financial

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

Diversification Opportunities for Eaton Vance and Focus Financial

-0.63

Correlation Coefficient

Eaton Vance  Focus Financial

Excellent diversification

The 3 months correlation between Eaton and Focus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners 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 Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Eaton Vance i.e., Eaton Vance and Focus Financial go up and down completely randomly.

Pair Corralation between Eaton Vance and Focus Financial

Considering the 90-day investment horizon Eaton Vance is expected to generate 10.87 times less return on investment than Focus Financial. In addition to that, Eaton Vance is 1.01 times more volatile than Focus Financial Partners. It trades about 0.01 of its total potential returns per unit of risk. Focus Financial Partners is currently generating about 0.12 per unit of volatility. If you would invest  4,627  in Focus Financial Partners on October 23, 2024 and sell it today you would earn a total of  589.00  from holding Focus Financial Partners or generate 12.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.24%
Values	Daily Returns

Eaton Vance National  vs.  Focus Financial Partners

Eaton Vance National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance National 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Focus Financial Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eaton Vance and Focus Financial

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

The idea behind Eaton Vance National and Focus Financial Partners 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.