Correlation Between NVIDIA and Eaton Vance

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

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

Diversification Opportunities for NVIDIA and Eaton Vance

-0.03

Correlation Coefficient

NVIDIA  Eaton Vance

Good diversification

The 3 months correlation between NVIDIA and Eaton is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Eaton Vance Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Global and NVIDIA 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 NVIDIA 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 Global has no effect on the direction of NVIDIA i.e., NVIDIA and Eaton Vance go up and down completely randomly.

Pair Corralation between NVIDIA and Eaton Vance

Given the investment horizon of 90 days NVIDIA is expected to generate 8.15 times more return on investment than Eaton Vance. However, NVIDIA is 8.15 times more volatile than Eaton Vance Global. It trades about 0.13 of its potential returns per unit of risk. Eaton Vance Global is currently generating about 0.05 per unit of risk. If you would invest  4,516  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  9,315  from holding NVIDIA or generate 206.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

NVIDIA  vs.  Eaton Vance Global

NVIDIA

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eaton Vance Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Global 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 NVIDIA and Eaton Vance

The main advantage of trading using opposite NVIDIA and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA and Eaton Vance Global 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.