Correlation Between GM and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both GM and Eaton Vance 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 GM and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Eaton Vance New, you can compare the effects of market volatilities on GM and Eaton Vance 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 GM with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Eaton Vance.
Diversification Opportunities for GM and Eaton Vance
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Eaton is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Eaton Vance New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance New and GM 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 General Motors are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance New has no effect on the direction of GM i.e., GM and Eaton Vance go up and down completely randomly.
Pair Corralation between GM and Eaton Vance
Allowing for the 90-day total investment horizon General Motors is expected to generate 9.56 times more return on investment than Eaton Vance. However, GM is 9.56 times more volatile than Eaton Vance New. It trades about 0.09 of its potential returns per unit of risk. Eaton Vance New is currently generating about 0.08 per unit of risk. If you would invest 4,072 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,478 from holding General Motors or generate 36.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Eaton Vance New
Performance |
| Timeline |
| General Motors |
| Eaton Vance New |
GM and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Eaton Vance
The main advantage of trading using opposite GM and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.The idea behind General Motors and Eaton Vance New pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eaton Vance vs. Rbc Short Duration | Eaton Vance vs. Barings Active Short | Eaton Vance vs. Astor Longshort Fund | Eaton Vance vs. Rbc Ultra Short Fixed |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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