Correlation Between Eaton Vance and Flaherty Crumrine

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

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

Diversification Opportunities for Eaton Vance and Flaherty Crumrine

0.41

Correlation Coefficient

Eaton Vance  Flaherty Crumrine

Very weak diversification

The 3 months correlation between Eaton and Flaherty is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Flaherty Crumrine Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine 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 Tax are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of Eaton Vance i.e., Eaton Vance and Flaherty Crumrine go up and down completely randomly.

Pair Corralation between Eaton Vance and Flaherty Crumrine

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.15 times less return on investment than Flaherty Crumrine. In addition to that, Eaton Vance is 1.5 times more volatile than Flaherty Crumrine Preferred. It trades about 0.08 of its total potential returns per unit of risk. Flaherty Crumrine Preferred is currently generating about 0.14 per unit of volatility. If you would invest  748.00  in Flaherty Crumrine Preferred on September 14, 2024 and sell it today you would earn a total of  170.00  from holding Flaherty Crumrine Preferred or generate 22.73% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Flaherty Crumrine Preferred

Eaton Vance Tax

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Flaherty Crumrine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Flaherty Crumrine

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

The idea behind Eaton Vance Tax and Flaherty Crumrine Preferred 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.