Correlation Between Barloworld and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Barloworld 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 Barloworld and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Eaton Vance Short, you can compare the effects of market volatilities on Barloworld 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 Barloworld with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Eaton Vance.
Diversification Opportunities for Barloworld and Eaton Vance
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Eaton is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Eaton Vance Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Short and Barloworld 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 Barloworld Ltd ADR 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 Short has no effect on the direction of Barloworld i.e., Barloworld and Eaton Vance go up and down completely randomly.
Pair Corralation between Barloworld and Eaton Vance
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Eaton Vance. In addition to that, Barloworld is 16.01 times more volatile than Eaton Vance Short. It trades about -0.01 of its total potential returns per unit of risk. Eaton Vance Short is currently generating about 0.12 per unit of volatility. If you would invest 604.00 in Eaton Vance Short on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Eaton Vance Short or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Eaton Vance Short
Performance |
| Timeline |
| Barloworld ADR |
| Eaton Vance Short |
Barloworld and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Eaton Vance
The main advantage of trading using opposite Barloworld and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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