Correlation Between Touchstone Ultra and Eaton Vance

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Can any of the company-specific risk be diversified away by investing in both Touchstone Ultra 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 Touchstone Ultra and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Ultra Short and Eaton Vance Atlanta, you can compare the effects of market volatilities on Touchstone Ultra 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 Touchstone Ultra with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Ultra and Eaton Vance.

Diversification Opportunities for Touchstone Ultra and Eaton Vance

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Touchstone and Eaton is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short and Eaton Vance Atlanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Atlanta and Touchstone Ultra 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 Touchstone Ultra Short 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 Atlanta has no effect on the direction of Touchstone Ultra i.e., Touchstone Ultra and Eaton Vance go up and down completely randomly.

Pair Corralation between Touchstone Ultra and Eaton Vance

Assuming the 90 days horizon Touchstone Ultra is expected to generate 2.57 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Touchstone Ultra Short is 8.97 times less risky than Eaton Vance. It trades about 0.25 of its potential returns per unit of risk. Eaton Vance Atlanta is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,703  in Eaton Vance Atlanta on September 12, 2024 and sell it today you would earn a total of  885.00  from holding Eaton Vance Atlanta or generate 32.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Touchstone Ultra Short  vs.  Eaton Vance Atlanta

 Performance 
       Timeline  
Touchstone Ultra Short 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Ultra Short are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Eaton Vance Atlanta 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Atlanta are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Touchstone Ultra and Eaton Vance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone Ultra and Eaton Vance

The main advantage of trading using opposite Touchstone Ultra and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Ultra 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 Touchstone Ultra Short and Eaton Vance Atlanta 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.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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