Correlation Between Eaton Vance and Gabelli Equity

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

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

Diversification Opportunities for Eaton Vance and Gabelli Equity

0.85

Correlation Coefficient

Eaton Vance  Gabelli Equity

Very poor diversification

The 3 months correlation between Eaton and Gabelli is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Gabelli Equity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity Trust 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 Tax are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity Trust has no effect on the direction of Eaton Vance i.e., Eaton Vance and Gabelli Equity go up and down completely randomly.

Pair Corralation between Eaton Vance and Gabelli Equity

Considering the 90-day investment horizon Eaton Vance Tax is expected to generate 0.63 times more return on investment than Gabelli Equity. However, Eaton Vance Tax is 1.59 times less risky than Gabelli Equity. It trades about 0.3 of its potential returns per unit of risk. Gabelli Equity Trust is currently generating about 0.16 per unit of risk. If you would invest  1,372  in Eaton Vance Tax on September 1, 2024 and sell it today you would earn a total of  135.00  from holding Eaton Vance Tax or generate 9.84% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Gabelli Equity Trust

Eaton Vance Tax

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Gabelli Equity Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Equity Trust are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Gabelli Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Eaton Vance and Gabelli Equity

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

The idea behind Eaton Vance Tax and Gabelli Equity Trust 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.