Correlation Between Eaton Vance and Flow Capital

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Flow Capital 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 Flow Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eaton Vance Senior and Flow Capital Corp, you can compare the effects of market volatilities on Eaton Vance and Flow Capital 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 Flow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Flow Capital.

Diversification Opportunities for Eaton Vance and Flow Capital

0.3

Correlation Coefficient

Eaton Vance  Flow Capital

Weak diversification

The 3 months correlation between Eaton and Flow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Senior and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital 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 Senior are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of Eaton Vance i.e., Eaton Vance and Flow Capital go up and down completely randomly.

Pair Corralation between Eaton Vance and Flow Capital

Considering the 90-day investment horizon Eaton Vance Senior is expected to generate 1.65 times more return on investment than Flow Capital. However, Eaton Vance is 1.65 times more volatile than Flow Capital Corp. It trades about 0.13 of its potential returns per unit of risk. Flow Capital Corp is currently generating about -0.15 per unit of risk. If you would invest  612.00  in Eaton Vance Senior on September 4, 2024 and sell it today you would earn a total of  14.00  from holding Eaton Vance Senior or generate 2.29% 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 Senior  vs.  Flow Capital Corp

Eaton Vance Senior

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Senior are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Flow Capital Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Capital Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Flow Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Vance and Flow Capital

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

The idea behind Eaton Vance Senior and Flow Capital 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.