Correlation Between Eaton Vance and Highland Floating

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

Diversification Opportunities for Eaton Vance and Highland Floating

-0.39

Correlation Coefficient

Eaton Vance  Highland Floating

Very good diversification

The 3 months correlation between Eaton and Highland is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Highland Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Floating Rate 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 Highland Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Floating Rate has no effect on the direction of Eaton Vance i.e., Eaton Vance and Highland Floating go up and down completely randomly.

Pair Corralation between Eaton Vance and Highland Floating

Considering the 90-day investment horizon Eaton Vance is expected to generate 7.14 times less return on investment than Highland Floating. But when comparing it to its historical volatility, Eaton Vance Tax is 4.57 times less risky than Highland Floating. It trades about 0.07 of its potential returns per unit of risk. Highland Floating Rate is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Highland Floating Rate on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Highland Floating Rate or generate 4.73% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Highland Floating Rate

Eaton Vance Tax

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 11 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Highland Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Highland Floating is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Highland Floating

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

The idea behind Eaton Vance Tax and Highland Floating Rate 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.