Correlation Between Western Acquisition and Eaton Vance

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

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

Diversification Opportunities for Western Acquisition and Eaton Vance

0.62

Correlation Coefficient

Western Acquisition  Eaton Vance

Poor diversification

The 3 months correlation between Western and Eaton is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Eaton Vance Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Floating and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Eaton Vance go up and down completely randomly.

Pair Corralation between Western Acquisition and Eaton Vance

Assuming the 90 days horizon Western Acquisition Ventures is expected to generate 1.53 times more return on investment than Eaton Vance. However, Western Acquisition is 1.53 times more volatile than Eaton Vance Floating. It trades about 0.17 of its potential returns per unit of risk. Eaton Vance Floating is currently generating about 0.19 per unit of risk. If you would invest  1,075  in Western Acquisition Ventures on September 3, 2024 and sell it today you would earn a total of  79.00  from holding Western Acquisition Ventures or generate 7.35% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Eaton Vance Floating

Western Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Floating

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Acquisition and Eaton Vance

The main advantage of trading using opposite Western Acquisition and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures and Eaton Vance Floating 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.