Correlation Between Eaton Vance and Small Cap
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Floating Rate and Small Cap Stock, you can compare the effects of market volatilities on Eaton Vance and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Small Cap.
Diversification Opportunities for Eaton Vance and Small Cap
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eaton and Small is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Floating Rate and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Floating Rate are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Eaton Vance i.e., Eaton Vance and Small Cap go up and down completely randomly.
Pair Corralation between Eaton Vance and Small Cap
Assuming the 90 days horizon Eaton Vance is expected to generate 9.94 times less return on investment than Small Cap. But when comparing it to its historical volatility, Eaton Vance Floating Rate is 10.44 times less risky than Small Cap. It trades about 0.24 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,419 in Small Cap Stock on August 29, 2024 and sell it today you would earn a total of 119.00 from holding Small Cap Stock or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Floating Rate vs. Small Cap Stock
Performance |
| Timeline |
| Eaton Vance Floating |
| Small Cap Stock |
Eaton Vance and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Small Cap
The main advantage of trading using opposite Eaton Vance and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Eaton Vance vs. Mesirow Financial Small | Eaton Vance vs. Angel Oak Financial | Eaton Vance vs. Versatile Bond Portfolio | Eaton Vance vs. Rbc Bluebay Global |
| Small Cap vs. Franklin Adjustable Government | Small Cap vs. Dreyfus Government Cash | Small Cap vs. Lord Abbett Government | Small Cap vs. Inverse Government Long |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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