Correlation Between Eaton Vance and Simplify Stable

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

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

Diversification Opportunities for Eaton Vance and Simplify Stable

0.8

Correlation Coefficient

Eaton Vance  Simplify Stable

Very poor diversification

The 3 months correlation between Eaton and Simplify is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and Simplify Stable Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Stable Income 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 Enhanced are associated (or correlated) with Simplify Stable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Stable Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and Simplify Stable go up and down completely randomly.

Pair Corralation between Eaton Vance and Simplify Stable

Considering the 90-day investment horizon Eaton Vance Enhanced is expected to generate 3.47 times more return on investment than Simplify Stable. However, Eaton Vance is 3.47 times more volatile than Simplify Stable Income. It trades about 0.27 of its potential returns per unit of risk. Simplify Stable Income is currently generating about 0.11 per unit of risk. If you would invest  2,061  in Eaton Vance Enhanced on September 4, 2024 and sell it today you would earn a total of  298.00  from holding Eaton Vance Enhanced or generate 14.46% return on investment over 90 days.

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

Eaton Vance Enhanced  vs.  Simplify Stable Income

Eaton Vance Enhanced

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Enhanced are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Eaton Vance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Simplify Stable Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Stable Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Simplify Stable is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eaton Vance and Simplify Stable

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

The idea behind Eaton Vance Enhanced and Simplify Stable Income 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.