Correlation Between Eaton Vance and Frost Growth

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

Diversification Opportunities for Eaton Vance and Frost Growth

-0.78

Correlation Coefficient

Eaton Vance  Frost Growth

Pay attention - limited upside

The 3 months correlation between Eaton and Frost is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Frost Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Growth Equity 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 Frost Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Growth Equity has no effect on the direction of Eaton Vance i.e., Eaton Vance and Frost Growth go up and down completely randomly.

Pair Corralation between Eaton Vance and Frost Growth

Considering the 90-day investment horizon Eaton Vance Tax is expected to generate 0.27 times more return on investment than Frost Growth. However, Eaton Vance Tax is 3.64 times less risky than Frost Growth. It trades about 0.13 of its potential returns per unit of risk. Frost Growth Equity is currently generating about -0.09 per unit of risk. If you would invest  1,361  in Eaton Vance Tax on October 22, 2024 and sell it today you would earn a total of  74.00  from holding Eaton Vance Tax or generate 5.44% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Frost Growth Equity

Eaton Vance Tax

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Frost Growth Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frost Growth Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Eaton Vance and Frost Growth

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

The idea behind Eaton Vance Tax and Frost Growth Equity 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.