Correlation Between Cornerstone Strategic and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic 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 Cornerstone Strategic and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Return and Eaton Vance Tax, you can compare the effects of market volatilities on Cornerstone Strategic 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 Cornerstone Strategic with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Eaton Vance.
Diversification Opportunities for Cornerstone Strategic and Eaton Vance
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cornerstone and Eaton is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and Cornerstone Strategic 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 Cornerstone Strategic Return 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 Tax has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Eaton Vance go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Eaton Vance
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to generate 1.39 times more return on investment than Eaton Vance. However, Cornerstone Strategic is 1.39 times more volatile than Eaton Vance Tax. It trades about 0.44 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.14 per unit of risk. If you would invest 834.00 in Cornerstone Strategic Return on August 31, 2024 and sell it today you would earn a total of 87.00 from holding Cornerstone Strategic Return or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. Eaton Vance Tax
Performance |
| Timeline |
| Cornerstone Strategic |
| Eaton Vance Tax |
Cornerstone Strategic and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Eaton Vance
The main advantage of trading using opposite Cornerstone Strategic and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic 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 Cornerstone Strategic Return and Eaton Vance Tax 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.
| Eaton Vance vs. Eaton Vance Tax | Eaton Vance vs. Eaton Vance Tax Managed | Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Eaton Vance Tax |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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