Correlation Between SPDR SP and Eaton Vance

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

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

Diversification Opportunities for SPDR SP and Eaton Vance

0.77

Correlation Coefficient

SPDR SP  Eaton Vance

Poor diversification

The 3 months correlation between SPDR and Eaton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and Eaton Vance Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Enhanced and SPDR SP 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 SPDR SP Oil 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 Enhanced has no effect on the direction of SPDR SP i.e., SPDR SP and Eaton Vance go up and down completely randomly.

Pair Corralation between SPDR SP and Eaton Vance

Considering the 90-day investment horizon SPDR SP is expected to generate 1.52 times less return on investment than Eaton Vance. In addition to that, SPDR SP is 1.62 times more volatile than Eaton Vance Enhanced. It trades about 0.1 of its total potential returns per unit of risk. Eaton Vance Enhanced is currently generating about 0.26 per unit of volatility. If you would invest  1,875  in Eaton Vance Enhanced on September 4, 2024 and sell it today you would earn a total of  294.00  from holding Eaton Vance Enhanced or generate 15.68% return on investment over 90 days.

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

SPDR SP Oil  vs.  Eaton Vance Enhanced

SPDR SP Oil

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Oil are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Enhanced

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Enhanced are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Eaton Vance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Eaton Vance

The main advantage of trading using opposite SPDR SP and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP Oil and Eaton Vance Enhanced 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.