Correlation Between Liberty All and Eaton Vance

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

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

Diversification Opportunities for Liberty All and Eaton Vance

0.68

Correlation Coefficient

Liberty All  Eaton Vance

Poor diversification

The 3 months correlation between Liberty and Eaton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Liberty All Star 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 Liberty All 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 Liberty All Star 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 Liberty All i.e., Liberty All and Eaton Vance go up and down completely randomly.

Pair Corralation between Liberty All and Eaton Vance

Considering the 90-day investment horizon Liberty All Star is expected to generate 1.17 times more return on investment than Eaton Vance. However, Liberty All is 1.17 times more volatile than Eaton Vance Tax. It trades about 0.17 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.07 per unit of risk. If you would invest  667.00  in Liberty All Star on August 31, 2024 and sell it today you would earn a total of  61.00  from holding Liberty All Star or generate 9.15% return on investment over 90 days.

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

Liberty All Star  vs.  Eaton Vance Tax

Liberty All Star

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty All Star are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Liberty All may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Eaton Vance Tax

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 5 (%) 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 Liberty All and Eaton Vance

The main advantage of trading using opposite Liberty All and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty All 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 Liberty All Star 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.