Correlation Between Urbana and Eaton Vance

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

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

Diversification Opportunities for Urbana and Eaton Vance

-0.67

Correlation Coefficient

Urbana  Eaton Vance

Excellent diversification

The 3 months correlation between Urbana and Eaton is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National and Urbana 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 Urbana 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 National has no effect on the direction of Urbana i.e., Urbana and Eaton Vance go up and down completely randomly.

Pair Corralation between Urbana and Eaton Vance

Assuming the 90 days horizon Urbana is expected to generate 1.9 times more return on investment than Eaton Vance. However, Urbana is 1.9 times more volatile than Eaton Vance National. It trades about 0.05 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.04 per unit of risk. If you would invest  305.00  in Urbana on September 18, 2024 and sell it today you would earn a total of  117.00  from holding Urbana or generate 38.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.57%
Values	Daily Returns

Urbana  vs.  Eaton Vance National

Urbana

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Urbana are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Urbana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Urbana and Eaton Vance

The main advantage of trading using opposite Urbana and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urbana 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 Urbana and Eaton Vance National 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.