Correlation Between Eaton Vance and Japan Smaller

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

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

Diversification Opportunities for Eaton Vance and Japan Smaller

-0.17

Correlation Coefficient

Eaton Vance  Japan Smaller

Good diversification

The 3 months correlation between Eaton and Japan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Risk and Japan Smaller Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Smaller Capita 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 Risk are associated (or correlated) with Japan Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Smaller Capita has no effect on the direction of Eaton Vance i.e., Eaton Vance and Japan Smaller go up and down completely randomly.

Pair Corralation between Eaton Vance and Japan Smaller

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.66 times less return on investment than Japan Smaller. But when comparing it to its historical volatility, Eaton Vance Risk is 1.47 times less risky than Japan Smaller. It trades about 0.22 of its potential returns per unit of risk. Japan Smaller Capitalization is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  768.00  in Japan Smaller Capitalization on September 13, 2024 and sell it today you would earn a total of  32.00  from holding Japan Smaller Capitalization or generate 4.17% return on investment over 90 days.

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

Eaton Vance Risk  vs.  Japan Smaller Capitalization

Eaton Vance Risk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Risk are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Japan Smaller Capita

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Smaller Capitalization are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Japan Smaller is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eaton Vance and Japan Smaller

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

The idea behind Eaton Vance Risk and Japan Smaller Capitalization 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.