Correlation Between Eaton Vance and Emerald Growth

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

Diversification Opportunities for Eaton Vance and Emerald Growth

0.91

Correlation Coefficient

Eaton Vance  Emerald Growth

Almost no diversification

The 3 months correlation between Eaton and Emerald is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth 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 Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Eaton Vance i.e., Eaton Vance and Emerald Growth go up and down completely randomly.

Pair Corralation between Eaton Vance and Emerald Growth

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.46 times less return on investment than Emerald Growth. But when comparing it to its historical volatility, Eaton Vance Tax is 2.05 times less risky than Emerald Growth. It trades about 0.23 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,327  in Emerald Growth Fund on August 31, 2024 and sell it today you would earn a total of  336.00  from holding Emerald Growth Fund or generate 14.44% 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 Tax  vs.  Emerald Growth Fund

Eaton Vance Tax

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Emerald Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Growth Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Vance and Emerald Growth

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

The idea behind Eaton Vance Tax and Emerald Growth Fund 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.