Correlation Between Eaton Vance and FAM
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and FAM 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 Eaton Vance and FAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Senior and FAM, you can compare the effects of market volatilities on Eaton Vance and FAM 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 Eaton Vance with a short position of FAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and FAM.
Diversification Opportunities for Eaton Vance and FAM
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eaton and FAM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM and Eaton Vance 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 Eaton Vance Senior are associated (or correlated) with FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Eaton Vance i.e., Eaton Vance and FAM go up and down completely randomly.
Pair Corralation between Eaton Vance and FAM
Considering the 90-day investment horizon Eaton Vance is expected to generate 1.02 times less return on investment than FAM. But when comparing it to its historical volatility, Eaton Vance Senior is 1.17 times less risky than FAM. It trades about 0.11 of its potential returns per unit of risk. FAM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 490.00 in FAM on September 4, 2024 and sell it today you would earn a total of 184.00 from holding FAM or generate 37.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.1% |
| Values | Daily Returns |
Eaton Vance Senior vs. FAM
Performance |
| Timeline |
| Eaton Vance Senior |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Eaton Vance and FAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and FAM
The main advantage of trading using opposite Eaton Vance and FAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, FAM 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 FAM will offset losses from the drop in FAM's long position.| Eaton Vance vs. Visa Class A | Eaton Vance vs. Diamond Hill Investment | Eaton Vance vs. Associated Capital Group | Eaton Vance vs. Brookfield Corp |
| FAM vs. Brookfield Real Assets | FAM vs. Guggenheim Strategic Opportunities | FAM vs. Cornerstone Strategic Return | FAM vs. Cornerstone Strategic Value |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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