Correlation Between Eaton Vance and European Equity
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and European Equity 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 European Equity 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 European Equity Closed, you can compare the effects of market volatilities on Eaton Vance and European Equity 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 European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and European Equity.
Diversification Opportunities for Eaton Vance and European Equity
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eaton and European is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed 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 European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of Eaton Vance i.e., Eaton Vance and European Equity go up and down completely randomly.
Pair Corralation between Eaton Vance and European Equity
Considering the 90-day investment horizon Eaton Vance National is expected to generate 0.55 times more return on investment than European Equity. However, Eaton Vance National is 1.8 times less risky than European Equity. It trades about -0.03 of its potential returns per unit of risk. European Equity Closed is currently generating about -0.13 per unit of risk. If you would invest 1,753 in Eaton Vance National on September 1, 2024 and sell it today you would lose (7.00) from holding Eaton Vance National or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance National vs. European Equity Closed
Performance |
| Timeline |
| Eaton Vance National |
| European Equity Closed |
Eaton Vance and European Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and European Equity
The main advantage of trading using opposite Eaton Vance and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.| Eaton Vance vs. Visa Class A | Eaton Vance vs. Diamond Hill Investment | Eaton Vance vs. Distoken Acquisition | Eaton Vance vs. Associated Capital Group |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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