Correlation Between Small Cap and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Eaton Vance Floating Rate, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Eaton Vance.
Diversification Opportunities for Small Cap and Eaton Vance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Eaton is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Eaton Vance Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Floating and Small Cap 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 Small Cap Stock 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 Floating has no effect on the direction of Small Cap i.e., Small Cap and Eaton Vance go up and down completely randomly.
Pair Corralation between Small Cap and Eaton Vance
Assuming the 90 days horizon Small Cap Stock is expected to generate 29.42 times more return on investment than Eaton Vance. However, Small Cap is 29.42 times more volatile than Eaton Vance Floating Rate. It trades about 0.27 of its potential returns per unit of risk. Eaton Vance Floating Rate is currently generating about 0.24 per unit of risk. If you would invest 1,391 in Small Cap Stock on September 1, 2024 and sell it today you would earn a total of 134.00 from holding Small Cap Stock or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Small Cap Stock vs. Eaton Vance Floating Rate
Performance |
| Timeline |
| Small Cap Stock |
| Eaton Vance Floating |
Small Cap and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Eaton Vance
The main advantage of trading using opposite Small Cap and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Western Asset High | Small Cap vs. Needham Aggressive Growth | Small Cap vs. T Rowe Price | Small Cap vs. California High Yield Municipal |
| Eaton Vance vs. Pro Blend Moderate Term | Eaton Vance vs. Dimensional Retirement Income | Eaton Vance vs. Lifestyle Ii Moderate | Eaton Vance vs. Wisdomtree Siegel Moderate |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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