Correlation Between Eaton Vance and Health Care
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Health Care 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 Health Care 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 Health Care Select, you can compare the effects of market volatilities on Eaton Vance and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Health Care.
Diversification Opportunities for Eaton Vance and Health Care
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eaton and Health is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Eaton Vance i.e., Eaton Vance and Health Care go up and down completely randomly.
Pair Corralation between Eaton Vance and Health Care
Considering the 90-day investment horizon Eaton Vance is expected to generate 1.06 times less return on investment than Health Care. But when comparing it to its historical volatility, Eaton Vance Enhanced is 1.01 times less risky than Health Care. It trades about 0.18 of its potential returns per unit of risk. Health Care Select is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 14,018 in Health Care Select on November 18, 2024 and sell it today you would earn a total of 462.00 from holding Health Care Select or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Enhanced vs. Health Care Select
Performance |
| Timeline |
| Eaton Vance Enhanced |
| Health Care Select |
Eaton Vance and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Health Care
The main advantage of trading using opposite Eaton Vance and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Eaton Vance vs. Columbia Seligman Premium | Eaton Vance vs. BlackRock Utility Infrastructure | Eaton Vance vs. BlackRock Health Sciences | Eaton Vance vs. BlackRock Science Tech |
| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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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