Correlation Between Moderate Balanced and Eaton Vance

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

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

Diversification Opportunities for Moderate Balanced and Eaton Vance

0.34

Correlation Coefficient

Moderate Balanced  Eaton Vance

Weak diversification

The 3 months correlation between Moderate and Eaton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation 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 Moderate Balanced 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 Moderate Balanced Allocation 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 Moderate Balanced i.e., Moderate Balanced and Eaton Vance go up and down completely randomly.

Pair Corralation between Moderate Balanced and Eaton Vance

Assuming the 90 days horizon Moderate Balanced is expected to generate 1.11 times less return on investment than Eaton Vance. In addition to that, Moderate Balanced is 2.65 times more volatile than Eaton Vance Floating Rate. It trades about 0.06 of its total potential returns per unit of risk. Eaton Vance Floating Rate is currently generating about 0.19 per unit of volatility. If you would invest  833.00  in Eaton Vance Floating Rate on October 9, 2024 and sell it today you would earn a total of  170.00  from holding Eaton Vance Floating Rate or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Moderate Balanced Allocation  vs.  Eaton Vance Floating Rate

Moderate Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance Floating

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating Rate are ranked lower than 13 (%) 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 Moderate Balanced and Eaton Vance

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

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.