Correlation Between Live Oak and Eaton Vance

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

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

Diversification Opportunities for Live Oak and Eaton Vance

0.03

Correlation Coefficient

Live Oak  Eaton Vance

Significant diversification

The 3 months correlation between Live and Eaton is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Eaton Vance Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Municipal and Live Oak 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 Live Oak Health 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 Municipal has no effect on the direction of Live Oak i.e., Live Oak and Eaton Vance go up and down completely randomly.

Pair Corralation between Live Oak and Eaton Vance

Assuming the 90 days horizon Live Oak is expected to generate 16.07 times less return on investment than Eaton Vance. In addition to that, Live Oak is 3.1 times more volatile than Eaton Vance Municipal. It trades about 0.0 of its total potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.09 per unit of volatility. If you would invest  1,035  in Eaton Vance Municipal on September 12, 2024 and sell it today you would earn a total of  120.00  from holding Eaton Vance Municipal or generate 11.59% return on investment over 90 days.

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

Live Oak Health  vs.  Eaton Vance Municipal

Live Oak Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance Municipal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Municipal are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Live Oak and Eaton Vance

The main advantage of trading using opposite Live Oak and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak 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 Live Oak Health and Eaton Vance Municipal 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.