Correlation Between Columbia Convertible and Eaton Vance

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

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

Diversification Opportunities for Columbia Convertible and Eaton Vance

0.76

Correlation Coefficient

Columbia Convertible  Eaton Vance

Poor diversification

The 3 months correlation between Columbia and Eaton is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie 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 Columbia Convertible 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 Columbia Convertible Securities 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 Columbia Convertible i.e., Columbia Convertible and Eaton Vance go up and down completely randomly.

Pair Corralation between Columbia Convertible and Eaton Vance

Assuming the 90 days horizon Columbia Convertible Securities is expected to under-perform the Eaton Vance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Convertible Securities is 1.07 times less risky than Eaton Vance. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Eaton Vance Large Cap is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,568  in Eaton Vance Large Cap on December 21, 2024 and sell it today you would earn a total of  11.00  from holding Eaton Vance Large Cap or generate 0.43% return on investment over 90 days.

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

Columbia Convertible Securitie  vs.  Eaton Vance Large Cap

Columbia Convertible

Risk-Adjusted Performance

Very Weak

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

Eaton Vance Large

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Large Cap are ranked lower than 1 (%) 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 Columbia Convertible and Eaton Vance

The main advantage of trading using opposite Columbia Convertible and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible 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 Columbia Convertible Securities 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.