Correlation Between Financial and Eaton Vance

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

By analyzing existing cross correlation between Financial 15 Split and Eaton Vance Senior, you can compare the effects of market volatilities on Financial and Eaton Vance 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 Financial with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Eaton Vance.

Diversification Opportunities for Financial and Eaton Vance

0.2

Correlation Coefficient

Financial  Eaton Vance

Modest diversification

The 3 months correlation between Financial and Eaton is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Eaton Vance Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Senior and Financial 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 Financial 15 Split are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Senior has no effect on the direction of Financial i.e., Financial and Eaton Vance go up and down completely randomly.

Pair Corralation between Financial and Eaton Vance

Assuming the 90 days horizon Financial 15 Split is expected to under-perform the Eaton Vance. In addition to that, Financial is 4.47 times more volatile than Eaton Vance Senior. It trades about -0.11 of its total potential returns per unit of risk. Eaton Vance Senior is currently generating about -0.14 per unit of volatility. If you would invest  621.00  in Eaton Vance Senior on December 1, 2024 and sell it today you would lose (6.00) from holding Eaton Vance Senior or give up 0.97% of portfolio value over 90 days.

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

Financial 15 Split  vs.  Eaton Vance Senior

Financial 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with Financial and Eaton Vance

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

The idea behind Financial 15 Split and Eaton Vance Senior 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.