Correlation Between American Express and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Eaton Vance Enhanced, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Eaton Vance.
Diversification Opportunities for American Express and Eaton Vance
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Eaton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Express 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 American Express 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 American Express 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 American Express i.e., American Express and Eaton Vance go up and down completely randomly.
Pair Corralation between American Express and Eaton Vance
Considering the 90-day investment horizon American Express is expected to generate 1.58 times more return on investment than Eaton Vance. However, American Express is 1.58 times more volatile than Eaton Vance Enhanced. It trades about 0.1 of its potential returns per unit of risk. Eaton Vance Enhanced is currently generating about 0.11 per unit of risk. If you would invest 14,316 in American Express on September 13, 2024 and sell it today you would earn a total of 15,918 from holding American Express or generate 111.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Eaton Vance Enhanced
Performance |
| Timeline |
| American Express |
| Eaton Vance Enhanced |
American Express and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Eaton Vance
The main advantage of trading using opposite American Express and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Upstart Holdings | American Express vs. Mastercard |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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