Correlation Between Sprott and Eaton Vance

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

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

Diversification Opportunities for Sprott and Eaton Vance

0.05

Correlation Coefficient

Sprott  Eaton Vance

Significant diversification

The 3 months correlation between Sprott and Eaton is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc 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 Sprott 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 Sprott Inc 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 Sprott i.e., Sprott and Eaton Vance go up and down completely randomly.

Pair Corralation between Sprott and Eaton Vance

Considering the 90-day investment horizon Sprott Inc is expected to generate 2.34 times more return on investment than Eaton Vance. However, Sprott is 2.34 times more volatile than Eaton Vance Tax. It trades about 0.08 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about -0.14 per unit of risk. If you would invest  4,182  in Sprott Inc on December 21, 2024 and sell it today you would earn a total of  336.00  from holding Sprott Inc or generate 8.03% return on investment over 90 days.

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

Sprott Inc  vs.  Eaton Vance Tax

Sprott Inc

Risk-Adjusted Performance

Modest

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

Eaton Vance Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Tax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Sprott and Eaton Vance

The main advantage of trading using opposite Sprott and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott 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 Sprott Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.