Correlation Between Invesco Global and Eaton Vance

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

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

Diversification Opportunities for Invesco Global and Eaton Vance

0.08

Correlation Coefficient

Invesco Global  Eaton Vance

Significant diversification

The 3 months correlation between Invesco and Eaton is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Health and Eaton Vance Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Global and Invesco Global 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 Invesco Global Health 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 Global has no effect on the direction of Invesco Global i.e., Invesco Global and Eaton Vance go up and down completely randomly.

Pair Corralation between Invesco Global and Eaton Vance

Assuming the 90 days horizon Invesco Global Health is expected to under-perform the Eaton Vance. In addition to that, Invesco Global is 2.07 times more volatile than Eaton Vance Global. It trades about -0.39 of its total potential returns per unit of risk. Eaton Vance Global is currently generating about 0.17 per unit of volatility. If you would invest  1,416  in Eaton Vance Global on September 30, 2024 and sell it today you would earn a total of  31.00  from holding Eaton Vance Global or generate 2.19% return on investment over 90 days.

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

Invesco Global Health  vs.  Eaton Vance Global

Invesco Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Eaton Vance Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Global and Eaton Vance

The main advantage of trading using opposite Invesco Global and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Global 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 Invesco Global Health and Eaton Vance Global 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.