Correlation Between Eaton Vance and Virtus International

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

Diversification Opportunities for Eaton Vance and Virtus International

-0.05

Correlation Coefficient

Eaton Vance  Virtus International

Good diversification

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

Pair Corralation between Eaton Vance and Virtus International

Assuming the 90 days horizon Eaton Vance Large Cap is expected to generate 1.15 times more return on investment than Virtus International. However, Eaton Vance is 1.15 times more volatile than Virtus International Small Cap. It trades about -0.08 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about -0.19 per unit of risk. If you would invest  2,679  in Eaton Vance Large Cap on September 26, 2024 and sell it today you would lose (91.00) from holding Eaton Vance Large Cap or give up 3.4% of portfolio value over 90 days.

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

Eaton Vance Large Cap  vs.  Virtus International Small Cap

Eaton Vance Large

Risk-Adjusted Performance

0 of 100

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.

Virtus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Eaton Vance and Virtus International

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

The idea behind Eaton Vance Large Cap and Virtus International Small Cap 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.