Correlation Between Eaton Vance and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and GE Aerospace 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 GE Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Enhanced and GE Aerospace, you can compare the effects of market volatilities on Eaton Vance and GE Aerospace 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 GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and GE Aerospace.
Diversification Opportunities for Eaton Vance and GE Aerospace
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eaton and GE Aerospace is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace 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 Enhanced are associated (or correlated) with GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Eaton Vance i.e., Eaton Vance and GE Aerospace go up and down completely randomly.
Pair Corralation between Eaton Vance and GE Aerospace
Considering the 90-day investment horizon Eaton Vance Enhanced is expected to generate 0.53 times more return on investment than GE Aerospace. However, Eaton Vance Enhanced is 1.88 times less risky than GE Aerospace. It trades about 0.12 of its potential returns per unit of risk. GE Aerospace is currently generating about 0.06 per unit of risk. If you would invest 2,028 in Eaton Vance Enhanced on September 5, 2024 and sell it today you would earn a total of 338.00 from holding Eaton Vance Enhanced or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Enhanced vs. GE Aerospace
Performance |
| Timeline |
| Eaton Vance Enhanced |
| GE Aerospace |
Eaton Vance and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and GE Aerospace
The main advantage of trading using opposite Eaton Vance and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, GE Aerospace 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 GE Aerospace will offset losses from the drop in GE Aerospace's long position.| Eaton Vance vs. Western Asset High | Eaton Vance vs. Western Asset Global | Eaton Vance vs. Western Asset High | Eaton Vance vs. Voya Global Equity |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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