Correlation Between Rational/pier and Eaton Vance

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

By analyzing existing cross correlation between Rationalpier 88 Convertible and Eaton Vance Small Cap, you can compare the effects of market volatilities on Rational/pier 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 Rational/pier with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational/pier and Eaton Vance.

Diversification Opportunities for Rational/pier and Eaton Vance

0.92

Correlation Coefficient

Rational/pier  Eaton Vance

Almost no diversification

The 3 months correlation between Rational/pier and Eaton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rationalpier 88 Convertible and Eaton Vance Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Small and Rational/pier 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 Rationalpier 88 Convertible 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 Small has no effect on the direction of Rational/pier i.e., Rational/pier and Eaton Vance go up and down completely randomly.

Pair Corralation between Rational/pier and Eaton Vance

Assuming the 90 days horizon Rational/pier is expected to generate 1.53 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Rationalpier 88 Convertible is 2.69 times less risky than Eaton Vance. It trades about 0.27 of its potential returns per unit of risk. Eaton Vance Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,137  in Eaton Vance Small Cap on August 31, 2024 and sell it today you would earn a total of  120.00  from holding Eaton Vance Small Cap or generate 10.55% return on investment over 90 days.

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

Rationalpier 88 Convertible  vs.  Eaton Vance Small Cap

Rationalpier 88 Conv

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rational/pier may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Eaton Vance Small

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Rational/pier and Eaton Vance

The main advantage of trading using opposite Rational/pier and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational/pier 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 Rationalpier 88 Convertible and Eaton Vance Small Cap 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.