Correlation Between Rational Real and Eaton Vance

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

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

Diversification Opportunities for Rational Real and Eaton Vance

0.53

Correlation Coefficient

Rational Real  Eaton Vance

Very weak diversification

The 3 months correlation between Rational and Eaton is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rational Real Strategies and Eaton Vance Atlanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Atlanta and Rational Real 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 Rational Real Strategies 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 Atlanta has no effect on the direction of Rational Real i.e., Rational Real and Eaton Vance go up and down completely randomly.

Pair Corralation between Rational Real and Eaton Vance

Assuming the 90 days horizon Rational Real is expected to generate 9.28 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Rational Real Strategies is 25.51 times less risky than Eaton Vance. It trades about 0.32 of its potential returns per unit of risk. Eaton Vance Atlanta is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,497  in Eaton Vance Atlanta on October 22, 2024 and sell it today you would earn a total of  57.00  from holding Eaton Vance Atlanta or generate 1.63% return on investment over 90 days.

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

Rational Real Strategies  vs.  Eaton Vance Atlanta

Rational Real Strategies

Risk-Adjusted Performance

0 of 100

Weak

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

Eaton Vance Atlanta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Atlanta 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 Rational Real and Eaton Vance

The main advantage of trading using opposite Rational Real and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Real 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 Rational Real Strategies and Eaton Vance Atlanta 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.