Correlation Between Eaton Vance and Wells Fargo

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

Diversification Opportunities for Eaton Vance and Wells Fargo

0.8

Correlation Coefficient

Eaton Vance  Wells Fargo

Very poor diversification

The 3 months correlation between Eaton and Wells is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Wells Fargo Cb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Cb 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Cb has no effect on the direction of Eaton Vance i.e., Eaton Vance and Wells Fargo go up and down completely randomly.

Pair Corralation between Eaton Vance and Wells Fargo

If you would invest  1,426  in Eaton Vance Tax on September 25, 2024 and sell it today you would earn a total of  73.00  from holding Eaton Vance Tax or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Eaton Vance Tax  vs.  Wells Fargo Cb

Eaton Vance Tax

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Cb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wells Fargo Cb has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Wells Fargo

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

The idea behind Eaton Vance Tax and Wells Fargo Cb 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.