Correlation Between Eaton Vance and Brookfield Business

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

Diversification Opportunities for Eaton Vance and Brookfield Business

0.76

Correlation Coefficient

Eaton Vance  Brookfield Business

Poor diversification

The 3 months correlation between Eaton and Brookfield is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp 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 Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Eaton Vance i.e., Eaton Vance and Brookfield Business go up and down completely randomly.

Pair Corralation between Eaton Vance and Brookfield Business

Considering the 90-day investment horizon Eaton Vance is expected to generate 3.18 times less return on investment than Brookfield Business. But when comparing it to its historical volatility, Eaton Vance Tax is 3.04 times less risky than Brookfield Business. It trades about 0.1 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,271  in Brookfield Business Corp on September 15, 2024 and sell it today you would earn a total of  299.00  from holding Brookfield Business Corp or generate 13.17% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Brookfield Business Corp

Eaton Vance Tax

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Brookfield Business Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Brookfield Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Vance and Brookfield Business

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

The idea behind Eaton Vance Tax and Brookfield Business Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.