Correlation Between HP and Eaton Vance

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

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

Diversification Opportunities for HP and Eaton Vance

0.59

Correlation Coefficient

HP  Eaton Vance

Very weak diversification

The 3 months correlation between HP and Eaton is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc 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 HP 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 HP Inc 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 HP i.e., HP and Eaton Vance go up and down completely randomly.

Pair Corralation between HP and Eaton Vance

Considering the 90-day investment horizon HP Inc is expected to under-perform the Eaton Vance. In addition to that, HP is 2.3 times more volatile than Eaton Vance Tax. It trades about -0.13 of its total potential returns per unit of risk. Eaton Vance Tax is currently generating about -0.02 per unit of volatility. If you would invest  2,384  in Eaton Vance Tax on December 26, 2024 and sell it today you would lose (26.00) from holding Eaton Vance Tax or give up 1.09% of portfolio value over 90 days.

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

HP Inc  vs.  Eaton Vance Tax

HP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Eaton Vance Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HP and Eaton Vance

The main advantage of trading using opposite HP and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.