Correlation Between Eaton Vance and SRH Total

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

Diversification Opportunities for Eaton Vance and SRH Total

0.71

Correlation Coefficient

Eaton Vance  SRH Total

Poor diversification

The 3 months correlation between Eaton and SRH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and SRH Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRH Total Return 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 SRH Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRH Total Return has no effect on the direction of Eaton Vance i.e., Eaton Vance and SRH Total go up and down completely randomly.

Pair Corralation between Eaton Vance and SRH Total

Considering the 90-day investment horizon Eaton Vance is expected to generate 15.62 times less return on investment than SRH Total. But when comparing it to its historical volatility, Eaton Vance Tax is 1.05 times less risky than SRH Total. It trades about 0.01 of its potential returns per unit of risk. SRH Total Return is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,584  in SRH Total Return on December 27, 2024 and sell it today you would earn a total of  146.50  from holding SRH Total Return or generate 9.25% return on investment over 90 days.

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

Eaton Vance Tax  vs.  SRH Total Return

Eaton Vance Tax

Risk-Adjusted Performance

Weak

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

SRH Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SRH Total Return are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, SRH Total may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eaton Vance and SRH Total

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

The idea behind Eaton Vance Tax and SRH Total Return 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.