Correlation Between Eaton Vance and Ares Dynamic

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

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

Diversification Opportunities for Eaton Vance and Ares Dynamic

0.36

Correlation Coefficient

Eaton Vance  Ares Dynamic

Weak diversification

The 3 months correlation between Eaton and Ares is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Floating and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit 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 Floating are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of Eaton Vance i.e., Eaton Vance and Ares Dynamic go up and down completely randomly.

Pair Corralation between Eaton Vance and Ares Dynamic

Considering the 90-day investment horizon Eaton Vance Floating is expected to generate 0.79 times more return on investment than Ares Dynamic. However, Eaton Vance Floating is 1.26 times less risky than Ares Dynamic. It trades about 0.19 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about 0.1 per unit of risk. If you would invest  1,276  in Eaton Vance Floating on September 3, 2024 and sell it today you would earn a total of  69.00  from holding Eaton Vance Floating or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eaton Vance Floating  vs.  Ares Dynamic Credit

Eaton Vance Floating

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ares Dynamic Credit

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Dynamic Credit are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Ares Dynamic is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eaton Vance and Ares Dynamic

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

The idea behind Eaton Vance Floating and Ares Dynamic Credit 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.