Correlation Between Eaton Vance and Urbana

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

Diversification Opportunities for Eaton Vance and Urbana

-0.67

Correlation Coefficient

Eaton Vance  Urbana

Excellent diversification

The 3 months correlation between Eaton and Urbana is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbana 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 Urbana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbana has no effect on the direction of Eaton Vance i.e., Eaton Vance and Urbana go up and down completely randomly.

Pair Corralation between Eaton Vance and Urbana

Considering the 90-day investment horizon Eaton Vance is expected to generate 2.48 times less return on investment than Urbana. But when comparing it to its historical volatility, Eaton Vance National is 1.9 times less risky than Urbana. It trades about 0.04 of its potential returns per unit of risk. Urbana is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Urbana on September 18, 2024 and sell it today you would earn a total of  117.00  from holding Urbana or generate 38.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.57%
Values	Daily Returns

Eaton Vance National  vs.  Urbana

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.

Urbana

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Urbana are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Urbana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eaton Vance and Urbana

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

The idea behind Eaton Vance National and Urbana 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.