Correlation Between European Equity and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both European Equity 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 European Equity and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and Eaton Vance National, you can compare the effects of market volatilities on European Equity 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 European Equity with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and Eaton Vance.
Diversification Opportunities for European Equity and Eaton Vance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Eaton is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed 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 European Equity 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 European Equity Closed 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 European Equity i.e., European Equity and Eaton Vance go up and down completely randomly.
Pair Corralation between European Equity and Eaton Vance
Considering the 90-day investment horizon European Equity Closed is expected to generate 1.4 times more return on investment than Eaton Vance. However, European Equity is 1.4 times more volatile than Eaton Vance National. It trades about 0.02 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.03 per unit of risk. If you would invest 807.00 in European Equity Closed on September 1, 2024 and sell it today you would earn a total of 53.00 from holding European Equity Closed or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Equity Closed vs. Eaton Vance National
Performance |
| Timeline |
| European Equity Closed |
| Eaton Vance National |
European Equity and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and Eaton Vance
The main advantage of trading using opposite European Equity and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity 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.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Invesco High Income |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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