Correlation Between Prudential Emerging and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Prudential Emerging 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 Prudential Emerging and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Emerging Markets and Eaton Vance Emerging, you can compare the effects of market volatilities on Prudential Emerging 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 Prudential Emerging with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Emerging and Eaton Vance.
Diversification Opportunities for Prudential Emerging and Eaton Vance
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Eaton is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Emerging Markets and Eaton Vance Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Emerging and Prudential Emerging 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 Prudential Emerging Markets 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 Emerging has no effect on the direction of Prudential Emerging i.e., Prudential Emerging and Eaton Vance go up and down completely randomly.
Pair Corralation between Prudential Emerging and Eaton Vance
Assuming the 90 days horizon Prudential Emerging Markets is expected to under-perform the Eaton Vance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Emerging Markets is 1.06 times less risky than Eaton Vance. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Eaton Vance Emerging is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 342.00 in Eaton Vance Emerging on January 26, 2024 and sell it today you would lose (8.00) from holding Eaton Vance Emerging or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Emerging Markets vs. Eaton Vance Emerging
Performance |
| Timeline |
| Prudential Emerging |
| Eaton Vance Emerging |
Prudential Emerging and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Emerging and Eaton Vance
The main advantage of trading using opposite Prudential Emerging and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Emerging 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 Prudential Emerging Markets and Eaton Vance Emerging 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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