Correlation Between Eaton Vance and Motorola Solutions

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

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

Diversification Opportunities for Eaton Vance and Motorola Solutions

0.23

Correlation Coefficient

Eaton Vance  Motorola Solutions

Modest diversification

The 3 months correlation between Eaton and Motorola is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Large Cap and Motorola Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorola Solutions 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 Large Cap are associated (or correlated) with Motorola Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorola Solutions has no effect on the direction of Eaton Vance i.e., Eaton Vance and Motorola Solutions go up and down completely randomly.

Pair Corralation between Eaton Vance and Motorola Solutions

Assuming the 90 days horizon Eaton Vance Large Cap is expected to generate 0.51 times more return on investment than Motorola Solutions. However, Eaton Vance Large Cap is 1.94 times less risky than Motorola Solutions. It trades about 0.01 of its potential returns per unit of risk. Motorola Solutions is currently generating about -0.14 per unit of risk. If you would invest  2,541  in Eaton Vance Large Cap on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Eaton Vance Large Cap or generate 0.39% return on investment over 90 days.

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

Eaton Vance Large Cap  vs.  Motorola Solutions

Eaton Vance Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Large Cap 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.

Motorola Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motorola Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eaton Vance and Motorola Solutions

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

The idea behind Eaton Vance Large Cap and Motorola Solutions 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.