Correlation Between Eaton Vance and Tiaa-cref Small-cap

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

By analyzing existing cross correlation between Eaton Vance Government and Tiaa Cref Small Cap Blend, you can compare the effects of market volatilities on Eaton Vance and Tiaa-cref Small-cap 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 Tiaa-cref Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Tiaa-cref Small-cap.

Diversification Opportunities for Eaton Vance and Tiaa-cref Small-cap

0.05

Correlation Coefficient

Eaton Vance  Tiaa-cref Small-cap

Significant diversification

The 3 months correlation between Eaton and Tiaa-cref is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Government and Tiaa Cref Small Cap Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref Small-cap 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 Government are associated (or correlated) with Tiaa-cref Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa-cref Small-cap has no effect on the direction of Eaton Vance i.e., Eaton Vance and Tiaa-cref Small-cap go up and down completely randomly.

Pair Corralation between Eaton Vance and Tiaa-cref Small-cap

Assuming the 90 days horizon Eaton Vance Government is expected to generate 0.24 times more return on investment than Tiaa-cref Small-cap. However, Eaton Vance Government is 4.18 times less risky than Tiaa-cref Small-cap. It trades about -0.42 of its potential returns per unit of risk. Tiaa Cref Small Cap Blend is currently generating about -0.21 per unit of risk. If you would invest  528.00  in Eaton Vance Government on October 9, 2024 and sell it today you would lose (13.00) from holding Eaton Vance Government or give up 2.46% of portfolio value over 90 days.

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

Eaton Vance Government  vs.  Tiaa Cref Small Cap Blend

Eaton Vance Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa-cref Small-cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Small Cap Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Tiaa-cref Small-cap 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 Tiaa-cref Small-cap

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

The idea behind Eaton Vance Government and Tiaa Cref Small Cap Blend 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.