Correlation Between Eaton Vance and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Ares Capital 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 Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance National and Ares Capital, you can compare the effects of market volatilities on Eaton Vance and Ares Capital 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 Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Ares Capital.
Diversification Opportunities for Eaton Vance and Ares Capital
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eaton and Ares is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital 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 National are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Eaton Vance i.e., Eaton Vance and Ares Capital go up and down completely randomly.
Pair Corralation between Eaton Vance and Ares Capital
Considering the 90-day investment horizon Eaton Vance is expected to generate 7.21 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Eaton Vance National is 1.05 times less risky than Ares Capital. It trades about 0.01 of its potential returns per unit of risk. Ares Capital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,623 in Ares Capital on October 25, 2024 and sell it today you would earn a total of 715.00 from holding Ares Capital or generate 44.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance National vs. Ares Capital
Performance |
| Timeline |
| Eaton Vance National |
| Ares Capital |
Eaton Vance and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Ares Capital
The main advantage of trading using opposite Eaton Vance and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Ares Capital 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 Ares Capital will offset losses from the drop in Ares Capital's long position.| Eaton Vance vs. DTF Tax Free | Eaton Vance vs. MFS Investment Grade | Eaton Vance vs. Nuveen California Select | Eaton Vance vs. Federated Premier Municipal |
| Ares Capital vs. MFS Investment Grade | Ares Capital vs. Eaton Vance National | Ares Capital vs. Nuveen California Select | Ares Capital vs. Federated Premier Municipal |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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