Correlation Between MOTOROLA SOLTN and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both MOTOROLA SOLTN 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 SOLTN 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 SOLTN and Eaton Vance Large Cap, you can compare the effects of market volatilities on MOTOROLA SOLTN 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 SOLTN with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOTOROLA SOLTN and Eaton Vance.

Diversification Opportunities for MOTOROLA SOLTN and Eaton Vance

0.91

Correlation Coefficient

MOTOROLA SOLTN  Eaton Vance

Almost no diversification

The 3 months correlation between MOTOROLA and Eaton is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MOTOROLA SOLTN 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 SOLTN 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 SOLTN 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 SOLTN i.e., MOTOROLA SOLTN and Eaton Vance go up and down completely randomly.

Pair Corralation between MOTOROLA SOLTN and Eaton Vance

Assuming the 90 days trading horizon MOTOROLA SOLTN is expected to generate 1.8 times more return on investment than Eaton Vance. However, MOTOROLA SOLTN is 1.8 times more volatile than Eaton Vance Large Cap. It trades about 0.15 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  39,502  in MOTOROLA SOLTN on September 12, 2024 and sell it today you would earn a total of  5,818  from holding MOTOROLA SOLTN or generate 14.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

MOTOROLA SOLTN   vs.  Eaton Vance Large Cap

MOTOROLA SOLTN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOTOROLA SOLTN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MOTOROLA SOLTN unveiled 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 SOLTN and Eaton Vance

The main advantage of trading using opposite MOTOROLA SOLTN and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOTOROLA SOLTN 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 SOLTN 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.