Correlation Between Eaton Vance and Pimco Income

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

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

Diversification Opportunities for Eaton Vance and Pimco Income

0.78

Correlation Coefficient

Eaton Vance  Pimco Income

Poor diversification

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

Pair Corralation between Eaton Vance and Pimco Income

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.43 times less return on investment than Pimco Income. In addition to that, Eaton Vance is 1.64 times more volatile than Pimco Income Strategy. It trades about 0.13 of its total potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.3 per unit of volatility. If you would invest  838.00  in Pimco Income Strategy on December 4, 2024 and sell it today you would earn a total of  19.00  from holding Pimco Income Strategy or generate 2.27% return on investment over 90 days.

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

Eaton Vance Limited  vs.  Pimco Income Strategy

Eaton Vance Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Limited are ranked lower than 2 (%) 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.

Pimco Income Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eaton Vance and Pimco Income

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

The idea behind Eaton Vance Limited and Pimco Income Strategy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.