Correlation Between Red Oak and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Red 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 Red 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 Red Oak Technology and Eaton Vance Global, you can compare the effects of market volatilities on Red 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 Red Oak with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Eaton Vance.

Diversification Opportunities for Red Oak and Eaton Vance

0.51

Correlation Coefficient

Red Oak  Eaton Vance

Very weak diversification

The 3 months correlation between Red and Eaton is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Eaton Vance Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Global and Red 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 Red Oak Technology 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 Global has no effect on the direction of Red Oak i.e., Red Oak and Eaton Vance go up and down completely randomly.

Pair Corralation between Red Oak and Eaton Vance

Assuming the 90 days horizon Red Oak is expected to generate 4.78 times less return on investment than Eaton Vance. In addition to that, Red Oak is 12.3 times more volatile than Eaton Vance Global. It trades about 0.0 of its total potential returns per unit of risk. Eaton Vance Global is currently generating about 0.19 per unit of volatility. If you would invest  821.00  in Eaton Vance Global on September 29, 2024 and sell it today you would earn a total of  25.00  from holding Eaton Vance Global or generate 3.05% return on investment over 90 days.

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

Red Oak Technology  vs.  Eaton Vance Global

Red Oak Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Global are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Red Oak and Eaton Vance

The main advantage of trading using opposite Red Oak and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red 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 Red Oak Technology and Eaton Vance Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.