Correlation Between Eaton Vance and Invesco Trust

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

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

Diversification Opportunities for Eaton Vance and Invesco Trust

0.82

Correlation Coefficient

Eaton Vance  Invesco Trust

Very poor diversification

The 3 months correlation between Eaton and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance New and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 New are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Eaton Vance i.e., Eaton Vance and Invesco Trust go up and down completely randomly.

Pair Corralation between Eaton Vance and Invesco Trust

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.93 times less return on investment than Invesco Trust. In addition to that, Eaton Vance is 1.23 times more volatile than Invesco Trust For. It trades about 0.04 of its total potential returns per unit of risk. Invesco Trust For is currently generating about 0.1 per unit of volatility. If you would invest  1,121  in Invesco Trust For on September 5, 2024 and sell it today you would earn a total of  33.00  from holding Invesco Trust For or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Eaton Vance New  vs.  Invesco Trust For

Eaton Vance New

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance New are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Invesco Trust For

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Trust For are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Invesco Trust

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

The idea behind Eaton Vance New and Invesco Trust For 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.