Correlation Between Orchid Island and Eaton Vance

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

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

Diversification Opportunities for Orchid Island and Eaton Vance

-0.07

Correlation Coefficient

Orchid Island  Eaton Vance

Good diversification

The 3 months correlation between Orchid and Eaton is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Island Capital and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and Orchid Island 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 Orchid Island Capital 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 Tax has no effect on the direction of Orchid Island i.e., Orchid Island and Eaton Vance go up and down completely randomly.

Pair Corralation between Orchid Island and Eaton Vance

Considering the 90-day investment horizon Orchid Island is expected to generate 1.15 times less return on investment than Eaton Vance. In addition to that, Orchid Island is 1.94 times more volatile than Eaton Vance Tax. It trades about 0.05 of its total potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.1 per unit of volatility. If you would invest  718.00  in Eaton Vance Tax on September 12, 2024 and sell it today you would earn a total of  148.00  from holding Eaton Vance Tax or generate 20.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Orchid Island Capital  vs.  Eaton Vance Tax

Orchid Island Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orchid Island Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Orchid Island is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eaton Vance Tax

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Orchid Island and Eaton Vance

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