Correlation Between Empiric 2500 and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Empiric 2500 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 Empiric 2500 and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Empiric 2500 Fund and Eaton Vance Floating Rate, you can compare the effects of market volatilities on Empiric 2500 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 Empiric 2500 with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empiric 2500 and Eaton Vance.

Diversification Opportunities for Empiric 2500 and Eaton Vance

0.8

Correlation Coefficient

Empiric 2500  Eaton Vance

Very poor diversification

The 3 months correlation between Empiric and Eaton is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Empiric 2500 Fund 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 Empiric 2500 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 Empiric 2500 Fund 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 Empiric 2500 i.e., Empiric 2500 and Eaton Vance go up and down completely randomly.

Pair Corralation between Empiric 2500 and Eaton Vance

Assuming the 90 days horizon Empiric 2500 Fund is expected to generate 7.5 times more return on investment than Eaton Vance. However, Empiric 2500 is 7.5 times more volatile than Eaton Vance Floating Rate. It trades about 0.13 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  6,392  in Empiric 2500 Fund on September 15, 2024 and sell it today you would earn a total of  508.00  from holding Empiric 2500 Fund or generate 7.95% return on investment over 90 days.

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

Empiric 2500 Fund  vs.  Eaton Vance Floating Rate

Empiric 2500

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Empiric 2500 Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Empiric 2500 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Floating

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating Rate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Empiric 2500 and Eaton Vance

The main advantage of trading using opposite Empiric 2500 and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empiric 2500 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 Empiric 2500 Fund and Eaton Vance Floating Rate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.