Correlation Between Eaton Vance and Perritt Ultra

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

By analyzing existing cross correlation between Eaton Vance Large Cap and Perritt Ultra Microcap, you can compare the effects of market volatilities on Eaton Vance and Perritt Ultra 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 Perritt Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Perritt Ultra.

Diversification Opportunities for Eaton Vance and Perritt Ultra

0.44

Correlation Coefficient

Eaton Vance  Perritt Ultra

Very weak diversification

The 3 months correlation between Eaton and PERRITT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Large Cap and Perritt Ultra Microcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perritt Ultra Microcap 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 Large Cap are associated (or correlated) with Perritt Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perritt Ultra Microcap has no effect on the direction of Eaton Vance i.e., Eaton Vance and Perritt Ultra go up and down completely randomly.

Pair Corralation between Eaton Vance and Perritt Ultra

Assuming the 90 days horizon Eaton Vance Large Cap is expected to generate 0.75 times more return on investment than Perritt Ultra. However, Eaton Vance Large Cap is 1.33 times less risky than Perritt Ultra. It trades about 0.18 of its potential returns per unit of risk. Perritt Ultra Microcap is currently generating about 0.08 per unit of risk. If you would invest  2,613  in Eaton Vance Large Cap on September 2, 2024 and sell it today you would earn a total of  214.00  from holding Eaton Vance Large Cap or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.5%
Values	Daily Returns

Eaton Vance Large Cap  vs.  Perritt Ultra Microcap

Eaton Vance Large

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Perritt Ultra Microcap

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Perritt Ultra Microcap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Perritt Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Perritt Ultra

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

The idea behind Eaton Vance Large Cap and Perritt Ultra Microcap 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.