Correlation Between Eaton Vance and Gabelli Equity

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

Diversification Opportunities for Eaton Vance and Gabelli Equity

-0.25

Correlation Coefficient

Eaton Vance  Gabelli Equity

Very good diversification

The 3 months correlation between Eaton and Gabelli is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli 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 Senior are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Eaton Vance i.e., Eaton Vance and Gabelli Equity go up and down completely randomly.

Pair Corralation between Eaton Vance and Gabelli Equity

Considering the 90-day investment horizon Eaton Vance Senior is expected to under-perform the Gabelli Equity. But the stock apears to be less risky and, when comparing its historical volatility, Eaton Vance Senior is 1.12 times less risky than Gabelli Equity. The stock trades about -0.11 of its potential returns per unit of risk. The The Gabelli Equity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,099  in The Gabelli Equity on December 29, 2024 and sell it today you would earn a total of  16.00  from holding The Gabelli Equity or generate 0.76% return on investment over 90 days.

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

Eaton Vance Senior  vs.  The Gabelli Equity

Eaton Vance Senior

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Senior has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Gabelli Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eaton Vance and Gabelli Equity

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

The idea behind Eaton Vance Senior and The Gabelli 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.