Correlation Between Smallcap Growth and Eaton Vance

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

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

Diversification Opportunities for Smallcap Growth and Eaton Vance

0.82

Correlation Coefficient

Smallcap Growth  Eaton Vance

Very poor diversification

The 3 months correlation between Smallcap and Eaton is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Eaton Vance Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Floating and Smallcap Growth 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 Smallcap Growth Fund 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 Floating has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Eaton Vance go up and down completely randomly.

Pair Corralation between Smallcap Growth and Eaton Vance

Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 10.31 times more return on investment than Eaton Vance. However, Smallcap Growth is 10.31 times more volatile than Eaton Vance Floating Rate. It trades about 0.16 of its potential returns per unit of risk. Eaton Vance Floating Rate is currently generating about 0.2 per unit of risk. If you would invest  1,596  in Smallcap Growth Fund on September 4, 2024 and sell it today you would earn a total of  132.00  from holding Smallcap Growth Fund or generate 8.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

Smallcap Growth Fund  vs.  Eaton Vance Floating Rate

Smallcap Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Smallcap Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Floating

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential 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 Smallcap Growth and Eaton Vance

The main advantage of trading using opposite Smallcap Growth and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth 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 Smallcap Growth Fund and Eaton Vance Floating Rate 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.