Correlation Between New America and Eaton Vance

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

By analyzing existing cross correlation between New America High and Eaton Vance Risk, you can compare the effects of market volatilities on New America and Eaton Vance 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 New America with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of New America and Eaton Vance.

Diversification Opportunities for New America and Eaton Vance

0.44

Correlation Coefficient

New America  Eaton Vance

Very weak diversification

The 3 months correlation between New and Eaton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding New America High and Eaton Vance Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Risk and New America 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 New America High are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Risk has no effect on the direction of New America i.e., New America and Eaton Vance go up and down completely randomly.

Pair Corralation between New America and Eaton Vance

Considering the 90-day investment horizon New America is expected to generate 3.11 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, New America High is 1.33 times less risky than Eaton Vance. It trades about 0.05 of its potential returns per unit of risk. Eaton Vance Risk is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  893.00  in Eaton Vance Risk on September 14, 2024 and sell it today you would earn a total of  42.00  from holding Eaton Vance Risk or generate 4.7% return on investment over 90 days.

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

New America High  vs.  Eaton Vance Risk

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.

Eaton Vance Risk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Risk are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with New America and Eaton Vance

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

The idea behind New America High and Eaton Vance Risk 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.