Correlation Between Eaton Vance and Absolute Capital

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

Diversification Opportunities for Eaton Vance and Absolute Capital

0.93

Correlation Coefficient

Eaton Vance  Absolute Capital

Almost no diversification

The 3 months correlation between Eaton and Absolute is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset 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 Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Eaton Vance i.e., Eaton Vance and Absolute Capital go up and down completely randomly.

Pair Corralation between Eaton Vance and Absolute Capital

Considering the 90-day investment horizon Eaton Vance Tax is expected to generate 1.16 times more return on investment than Absolute Capital. However, Eaton Vance is 1.16 times more volatile than Absolute Capital Asset. It trades about 0.06 of its potential returns per unit of risk. Absolute Capital Asset is currently generating about -0.05 per unit of risk. If you would invest  1,419  in Eaton Vance Tax on September 25, 2024 and sell it today you would earn a total of  13.00  from holding Eaton Vance Tax or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Eaton Vance Tax  vs.  Absolute Capital Asset

Eaton Vance Tax

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Absolute Capital Asset

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Capital Asset are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Absolute Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Absolute Capital

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

The idea behind Eaton Vance Tax and Absolute Capital Asset 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.

Check out your portfolio center.

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.