Correlation Between Perkins Mid and Eaton Vance

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

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

Diversification Opportunities for Perkins Mid and Eaton Vance

0.9

Correlation Coefficient

Perkins Mid  Eaton Vance

Almost no diversification

The 3 months correlation between Perkins and Eaton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap 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 Perkins Mid 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 Perkins Mid Cap 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 Perkins Mid i.e., Perkins Mid and Eaton Vance go up and down completely randomly.

Pair Corralation between Perkins Mid and Eaton Vance

Assuming the 90 days horizon Perkins Mid Cap is expected to generate 0.95 times more return on investment than Eaton Vance. However, Perkins Mid Cap is 1.05 times less risky than Eaton Vance. It trades about -0.04 of its potential returns per unit of risk. Eaton Vance Atlanta is currently generating about -0.09 per unit of risk. If you would invest  1,546  in Perkins Mid Cap on December 29, 2024 and sell it today you would lose (35.00) from holding Perkins Mid Cap or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Perkins Mid Cap  vs.  Eaton Vance Atlanta

Perkins Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perkins Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Perkins Mid 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

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 primary 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 Perkins Mid and Eaton Vance

The main advantage of trading using opposite Perkins Mid and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perkins Mid 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 Perkins Mid Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.