Correlation Between Eaton Vance and New America

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

Diversification Opportunities for Eaton Vance and New America

0.39

Correlation Coefficient

Eaton Vance  New America

Weak diversification

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

Pair Corralation between Eaton Vance and New America

Considering the 90-day investment horizon Eaton Vance Tax is expected to generate 1.43 times more return on investment than New America. However, Eaton Vance is 1.43 times more volatile than New America High. It trades about 0.1 of its potential returns per unit of risk. New America High is currently generating about 0.05 per unit of risk. If you would invest  825.00  in Eaton Vance Tax on September 14, 2024 and sell it today you would earn a total of  35.00  from holding Eaton Vance Tax or generate 4.24% return on investment over 90 days.

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

Eaton Vance Tax  vs.  New America High

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

New America High

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New America High are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, New America is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and New America

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

The idea behind Eaton Vance Tax and New America High 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.