Correlation Between Aberdeen China and Eaton Vance

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Can any of the company-specific risk be diversified away by investing in both Aberdeen China 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 Aberdeen China and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen China Oppty and Eaton Vance Greater, you can compare the effects of market volatilities on Aberdeen China 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 Aberdeen China with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and Eaton Vance.

Diversification Opportunities for Aberdeen China and Eaton Vance

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Aberdeen and Eaton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty and Eaton Vance Greater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Greater and Aberdeen China 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 Aberdeen China Oppty 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 Greater has no effect on the direction of Aberdeen China i.e., Aberdeen China and Eaton Vance go up and down completely randomly.

Pair Corralation between Aberdeen China and Eaton Vance

Assuming the 90 days horizon Aberdeen China Oppty is expected to under-perform the Eaton Vance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aberdeen China Oppty is 1.2 times less risky than Eaton Vance. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Eaton Vance Greater is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Eaton Vance Greater on September 13, 2024 and sell it today you would earn a total of  44.00  from holding Eaton Vance Greater or generate 3.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Aberdeen China Oppty  vs.  Eaton Vance Greater

 Performance 
       Timeline  
Aberdeen China Oppty 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen China Oppty are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aberdeen China showed solid returns over the last few months and may actually be approaching a breakup point.
Eaton Vance Greater 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Greater are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Eaton Vance showed solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen China and Eaton Vance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen China and Eaton Vance

The main advantage of trading using opposite Aberdeen China and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China 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 Aberdeen China Oppty and Eaton Vance Greater 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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