Correlation Between Pace Smallmedium and Eaton Vance

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

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

Diversification Opportunities for Pace Smallmedium and Eaton Vance

0.96

Correlation Coefficient

Pace Smallmedium  Eaton Vance

Almost no diversification

The 3 months correlation between Pace and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Eaton Vance Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Small and Pace Smallmedium 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 Pace Smallmedium Value 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 Small has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Eaton Vance go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Eaton Vance

Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 0.9 times more return on investment than Eaton Vance. However, Pace Smallmedium Value is 1.11 times less risky than Eaton Vance. It trades about 0.11 of its potential returns per unit of risk. Eaton Vance Small Cap is currently generating about 0.08 per unit of risk. If you would invest  1,903  in Pace Smallmedium Value on September 16, 2024 and sell it today you would earn a total of  133.00  from holding Pace Smallmedium Value or generate 6.99% return on investment over 90 days.

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

Pace Smallmedium Value  vs.  Eaton Vance Small Cap

Pace Smallmedium Value

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental 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 Pace Smallmedium and Eaton Vance

The main advantage of trading using opposite Pace Smallmedium and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium 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 Pace Smallmedium Value and Eaton Vance Small 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.