Correlation Between Logan Ridge and Eaton Vance

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

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

Diversification Opportunities for Logan Ridge and Eaton Vance

-0.35

Correlation Coefficient

Logan Ridge  Eaton Vance

Very good diversification

The 3 months correlation between Logan and Eaton is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National and Logan Ridge 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 Logan Ridge Finance 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 National has no effect on the direction of Logan Ridge i.e., Logan Ridge and Eaton Vance go up and down completely randomly.

Pair Corralation between Logan Ridge and Eaton Vance

Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 3.81 times more return on investment than Eaton Vance. However, Logan Ridge is 3.81 times more volatile than Eaton Vance National. It trades about 0.19 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.02 per unit of risk. If you would invest  2,121  in Logan Ridge Finance on September 3, 2024 and sell it today you would earn a total of  479.00  from holding Logan Ridge Finance or generate 22.58% return on investment over 90 days.

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

Logan Ridge Finance  vs.  Eaton Vance National

Logan Ridge Finance

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Logan Ridge exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance National are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Logan Ridge and Eaton Vance

The main advantage of trading using opposite Logan Ridge and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logan Ridge 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 Logan Ridge Finance and Eaton Vance National 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.