Correlation Between Gabelli Equity and Eaton Vance

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

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

Diversification Opportunities for Gabelli Equity and Eaton Vance

0.85

Correlation Coefficient

Gabelli Equity  Eaton Vance

Very poor diversification

The 3 months correlation between Gabelli and Eaton is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Equity Trust and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and Gabelli Equity 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 Gabelli Equity Trust 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 Tax has no effect on the direction of Gabelli Equity i.e., Gabelli Equity and Eaton Vance go up and down completely randomly.

Pair Corralation between Gabelli Equity and Eaton Vance

Considering the 90-day investment horizon Gabelli Equity is expected to generate 1.18 times less return on investment than Eaton Vance. In addition to that, Gabelli Equity is 1.4 times more volatile than Eaton Vance Tax. It trades about 0.05 of its total potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.08 per unit of volatility. If you would invest  1,166  in Eaton Vance Tax on September 3, 2024 and sell it today you would earn a total of  341.00  from holding Eaton Vance Tax or generate 29.25% return on investment over 90 days.

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

Gabelli Equity Trust  vs.  Eaton Vance Tax

Gabelli Equity Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Tax

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gabelli Equity and Eaton Vance

The main advantage of trading using opposite Gabelli Equity and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Equity 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 Gabelli Equity Trust and Eaton Vance Tax 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.