Correlation Between Rand Capital and Eaton Vance

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

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

Diversification Opportunities for Rand Capital and Eaton Vance

-0.48

Correlation Coefficient

Rand Capital  Eaton Vance

Very good diversification

The 3 months correlation between Rand and Eaton is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp 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 Rand Capital 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 Rand Capital Corp 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 Rand Capital i.e., Rand Capital and Eaton Vance go up and down completely randomly.

Pair Corralation between Rand Capital and Eaton Vance

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 6.93 times more return on investment than Eaton Vance. However, Rand Capital is 6.93 times more volatile than Eaton Vance Municipal. It trades about 0.16 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about -0.11 per unit of risk. If you would invest  1,367  in Rand Capital Corp on September 21, 2024 and sell it today you would earn a total of  416.00  from holding Rand Capital Corp or generate 30.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Rand Capital Corp  vs.  Eaton Vance Municipal

Rand Capital Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rand Capital and Eaton Vance

The main advantage of trading using opposite Rand Capital and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital 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 Rand Capital Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.