Correlation Between Eaton Vance and Transamerica Financial

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Transamerica Financial 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 Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eaton Vance Global and Transamerica Financial Life, you can compare the effects of market volatilities on Eaton Vance and Transamerica Financial 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 Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Transamerica Financial.

Diversification Opportunities for Eaton Vance and Transamerica Financial

-0.29

Correlation Coefficient

Eaton Vance  Transamerica Financial

Very good diversification

The 3 months correlation between Eaton and Transamerica is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Global and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial 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 Global are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Eaton Vance i.e., Eaton Vance and Transamerica Financial go up and down completely randomly.

Pair Corralation between Eaton Vance and Transamerica Financial

Assuming the 90 days horizon Eaton Vance Global is expected to under-perform the Transamerica Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eaton Vance Global is 1.05 times less risky than Transamerica Financial. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Transamerica Financial Life is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,174  in Transamerica Financial Life on September 4, 2024 and sell it today you would earn a total of  69.00  from holding Transamerica Financial Life or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eaton Vance Global  vs.  Transamerica Financial Life

Eaton Vance Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Financial Life are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Transamerica Financial

The main advantage of trading using opposite Eaton Vance and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Transamerica Financial 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 Transamerica Financial will offset losses from the drop in Transamerica Financial's long position.

The idea behind Eaton Vance Global and Transamerica Financial Life 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.