Correlation Between Nasdaq-100(r) and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Eaton Vance Limited, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Eaton Vance.
Diversification Opportunities for Nasdaq-100(r) and Eaton Vance
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq-100(r) and Eaton is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Eaton Vance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Limited and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Limited has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Eaton Vance go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Eaton Vance
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 8.4 times more return on investment than Eaton Vance. However, Nasdaq-100(r) is 8.4 times more volatile than Eaton Vance Limited. It trades about 0.07 of its potential returns per unit of risk. Eaton Vance Limited is currently generating about 0.0 per unit of risk. If you would invest 55,476 in Nasdaq 100 2x Strategy on August 31, 2024 and sell it today you would earn a total of 1,574 from holding Nasdaq 100 2x Strategy or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Eaton Vance Limited
Performance |
| Timeline |
| Nasdaq 100 2x |
| Eaton Vance Limited |
Nasdaq-100(r) and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Eaton Vance
The main advantage of trading using opposite Nasdaq-100(r) and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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.| Nasdaq-100(r) vs. Sp 500 2x | Nasdaq-100(r) vs. Inverse Nasdaq 100 2x | Nasdaq-100(r) vs. Inverse Sp 500 | Nasdaq-100(r) vs. Ultra Nasdaq 100 Profunds |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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