Correlation Between Eaton Vance and BlackRock Capital

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

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

Diversification Opportunities for Eaton Vance and BlackRock Capital

0.59

Correlation Coefficient

Eaton Vance  BlackRock Capital

Very weak diversification

The 3 months correlation between Eaton and BlackRock is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital 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 Senior are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Eaton Vance i.e., Eaton Vance and BlackRock Capital go up and down completely randomly.

Pair Corralation between Eaton Vance and BlackRock Capital

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.19 times less return on investment than BlackRock Capital. But when comparing it to its historical volatility, Eaton Vance Senior is 1.96 times less risky than BlackRock Capital. It trades about 0.02 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,531  in BlackRock Capital Allocation on December 3, 2024 and sell it today you would earn a total of  4.00  from holding BlackRock Capital Allocation or generate 0.26% return on investment over 90 days.

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

Eaton Vance Senior  vs.  BlackRock Capital Allocation

Eaton Vance Senior

Risk-Adjusted Performance

Weak

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

BlackRock Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Capital Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eaton Vance and BlackRock Capital

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

The idea behind Eaton Vance Senior and BlackRock Capital Allocation 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.