Correlation Between Standard Life and Eaton Vance

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

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

Diversification Opportunities for Standard Life and Eaton Vance

-0.12

Correlation Coefficient

Standard Life  Eaton Vance

Good diversification

The 3 months correlation between Standard and Eaton is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Standard Life Aberdeen 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 Standard Life 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 Standard Life Aberdeen 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 Standard Life i.e., Standard Life and Eaton Vance go up and down completely randomly.

Pair Corralation between Standard Life and Eaton Vance

Assuming the 90 days horizon Standard Life Aberdeen is expected to generate 3.84 times more return on investment than Eaton Vance. However, Standard Life is 3.84 times more volatile than Eaton Vance Tax. It trades about 0.16 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.05 per unit of risk. If you would invest  706.00  in Standard Life Aberdeen on December 20, 2024 and sell it today you would earn a total of  199.00  from holding Standard Life Aberdeen or generate 28.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Standard Life Aberdeen  vs.  Eaton Vance Tax

Standard Life Aberdeen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Life Aberdeen are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Standard Life showed solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Tax

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Eaton Vance is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Standard Life and Eaton Vance

The main advantage of trading using opposite Standard Life and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Life 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 Standard Life Aberdeen 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.