Correlation Between Investec Global and Eaton Vance

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

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

Diversification Opportunities for Investec Global and Eaton Vance

0.5

Correlation Coefficient

Investec Global  Eaton Vance

Very weak diversification

The 3 months correlation between Investec and Eaton is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Eaton Vance Amt Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Amt and Investec Global 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 Investec Global Franchise 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 Amt has no effect on the direction of Investec Global i.e., Investec Global and Eaton Vance go up and down completely randomly.

Pair Corralation between Investec Global and Eaton Vance

Assuming the 90 days horizon Investec Global Franchise is expected to generate 1.74 times more return on investment than Eaton Vance. However, Investec Global is 1.74 times more volatile than Eaton Vance Amt Free. It trades about 0.08 of its potential returns per unit of risk. Eaton Vance Amt Free is currently generating about -0.02 per unit of risk. If you would invest  1,736  in Investec Global Franchise on October 26, 2024 and sell it today you would earn a total of  50.00  from holding Investec Global Franchise or generate 2.88% return on investment over 90 days.

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

Investec Global Franchise  vs.  Eaton Vance Amt Free

Investec Global Franchise

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Global Franchise are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Investec Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Amt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Amt Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investec Global and Eaton Vance

The main advantage of trading using opposite Investec Global and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global 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 Investec Global Franchise and Eaton Vance Amt Free 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 Global Correlations module to find global opportunities by holding instruments from different markets.