Correlation Between Motorola Solutions and Eaton Vance

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

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

Diversification Opportunities for Motorola Solutions and Eaton Vance

0.75

Correlation Coefficient

Motorola Solutions  Eaton Vance

Poor diversification

The 3 months correlation between Motorola and Eaton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and Eaton Vance Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Large and Motorola Solutions 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 Motorola Solutions 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 Large has no effect on the direction of Motorola Solutions i.e., Motorola Solutions and Eaton Vance go up and down completely randomly.

Pair Corralation between Motorola Solutions and Eaton Vance

Assuming the 90 days trading horizon Motorola Solutions is expected to generate 2.36 times more return on investment than Eaton Vance. However, Motorola Solutions is 2.36 times more volatile than Eaton Vance Large Cap. It trades about 0.14 of its potential returns per unit of risk. Eaton Vance Large Cap is currently generating about 0.07 per unit of risk. If you would invest  62,558  in Motorola Solutions on September 12, 2024 and sell it today you would earn a total of  10,417  from holding Motorola Solutions or generate 16.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Motorola Solutions  vs.  Eaton Vance Large Cap

Motorola Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Motorola Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Large

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Large Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Motorola Solutions and Eaton Vance

The main advantage of trading using opposite Motorola Solutions and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorola Solutions 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 Motorola Solutions and Eaton Vance Large Cap 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..