Correlation Between Eaton Vance and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Northern Lights 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 Northern Lights 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 Northern Lights, you can compare the effects of market volatilities on Eaton Vance and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Northern Lights.
Diversification Opportunities for Eaton Vance and Northern Lights
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eaton and Northern is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Eaton Vance i.e., Eaton Vance and Northern Lights go up and down completely randomly.
Pair Corralation between Eaton Vance and Northern Lights
Considering the 90-day investment horizon Eaton Vance is expected to generate 164.57 times less return on investment than Northern Lights. But when comparing it to its historical volatility, Eaton Vance National is 221.23 times less risky than Northern Lights. It trades about 0.13 of its potential returns per unit of risk. Northern Lights is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Northern Lights on August 29, 2024 and sell it today you would earn a total of 2,583 from holding Northern Lights or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.37% |
| Values | Daily Returns |
Eaton Vance National vs. Northern Lights
Performance |
| Timeline |
| Eaton Vance National |
| Northern Lights |
Eaton Vance and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Northern Lights
The main advantage of trading using opposite Eaton Vance and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Eaton Vance vs. Invesco High Income | Eaton Vance vs. Blackrock Muniholdings Ny | Eaton Vance vs. Nuveen California Select | Eaton Vance vs. MFS Investment Grade |
| Northern Lights vs. Vanguard Total Stock | Northern Lights vs. SPDR SP 500 | Northern Lights vs. iShares Core SP | Northern Lights vs. Vanguard Total Bond |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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