Correlation Between Eaton Vance and IShares Consumer

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and IShares Consumer 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 IShares Consumer 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 iShares Consumer Discretionary, you can compare the effects of market volatilities on Eaton Vance and IShares Consumer 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 IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and IShares Consumer.

Diversification Opportunities for Eaton Vance and IShares Consumer

0.95

Correlation Coefficient

Eaton Vance  IShares Consumer

Almost no diversification

The 3 months correlation between Eaton and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Enhanced and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of Eaton Vance i.e., Eaton Vance and IShares Consumer go up and down completely randomly.

Pair Corralation between Eaton Vance and IShares Consumer

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.32 times less return on investment than IShares Consumer. But when comparing it to its historical volatility, Eaton Vance Enhanced is 1.05 times less risky than IShares Consumer. It trades about 0.26 of its potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  8,229  in iShares Consumer Discretionary on September 3, 2024 and sell it today you would earn a total of  1,540  from holding iShares Consumer Discretionary or generate 18.71% return on investment over 90 days.

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

Eaton Vance Enhanced  vs.  iShares Consumer Discretionary

Eaton Vance Enhanced

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Enhanced are ranked lower than 20 (%) 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.

iShares Consumer Dis

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Consumer Discretionary are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, IShares Consumer exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Vance and IShares Consumer

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

The idea behind Eaton Vance Enhanced and iShares Consumer Discretionary 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.