Correlation Between Brightsphere Investment and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment 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 Brightsphere Investment and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brightsphere Investment Group and Eaton Vance National, you can compare the effects of market volatilities on Brightsphere Investment 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 Brightsphere Investment with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Eaton Vance.
Diversification Opportunities for Brightsphere Investment and Eaton Vance
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brightsphere and Eaton is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National and Brightsphere Investment 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 Brightsphere Investment Group 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 National has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Eaton Vance go up and down completely randomly.
Pair Corralation between Brightsphere Investment and Eaton Vance
Given the investment horizon of 90 days Brightsphere Investment Group is expected to under-perform the Eaton Vance. In addition to that, Brightsphere Investment is 1.48 times more volatile than Eaton Vance National. It trades about -0.08 of its total potential returns per unit of risk. Eaton Vance National is currently generating about -0.11 per unit of volatility. If you would invest 1,717 in Eaton Vance National on September 19, 2024 and sell it today you would lose (29.00) from holding Eaton Vance National or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brightsphere Investment Group vs. Eaton Vance National
Performance |
| Timeline |
| Brightsphere Investment |
| Eaton Vance National |
Brightsphere Investment and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brightsphere Investment and Eaton Vance
The main advantage of trading using opposite Brightsphere Investment and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment 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 Brightsphere Investment Group and Eaton Vance National 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.
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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