Correlation Between Nuveen California and Eaton Vance

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

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

Diversification Opportunities for Nuveen California and Eaton Vance

-0.49

Correlation Coefficient

Nuveen California  Eaton Vance

Very good diversification

The 3 months correlation between Nuveen and Eaton is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and Eaton Vance Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Enhanced and Nuveen California 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 Nuveen California Select 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 Enhanced has no effect on the direction of Nuveen California i.e., Nuveen California and Eaton Vance go up and down completely randomly.

Pair Corralation between Nuveen California and Eaton Vance

Considering the 90-day investment horizon Nuveen California is expected to generate 23.93 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Nuveen California Select is 1.33 times less risky than Eaton Vance. It trades about 0.02 of its potential returns per unit of risk. Eaton Vance Enhanced is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,867  in Eaton Vance Enhanced on September 3, 2024 and sell it today you would earn a total of  310.00  from holding Eaton Vance Enhanced or generate 16.6% return on investment over 90 days.

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

Nuveen California Select  vs.  Eaton Vance Enhanced

Nuveen California Select

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Select are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Eaton Vance Enhanced

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Enhanced are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Eaton Vance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen California and Eaton Vance

The main advantage of trading using opposite Nuveen California and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California 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 Nuveen California Select and Eaton Vance Enhanced 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.