Correlation Between Eaton Vance and TPG

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

Diversification Opportunities for Eaton Vance and TPG

0.87

Correlation Coefficient

Eaton Vance  TPG

Very poor diversification

The 3 months correlation between Eaton and TPG is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Eaton Vance i.e., Eaton Vance and TPG go up and down completely randomly.

Pair Corralation between Eaton Vance and TPG

Considering the 90-day investment horizon Eaton Vance is expected to generate 3.11 times less return on investment than TPG. But when comparing it to its historical volatility, Eaton Vance Tax is 3.28 times less risky than TPG. It trades about 0.2 of its potential returns per unit of risk. TPG Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,364  in TPG Inc on September 12, 2024 and sell it today you would earn a total of  1,682  from holding TPG Inc or generate 31.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Eaton Vance Tax  vs.  TPG Inc

Eaton Vance Tax

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TPG Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TPG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Vance and TPG

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

The idea behind Eaton Vance Tax and TPG Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.