Correlation Between Parametric Commodity and Eaton Vance

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

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

Diversification Opportunities for Parametric Commodity and Eaton Vance

-0.29

Correlation Coefficient

Parametric Commodity  Eaton Vance

Very good diversification

The 3 months correlation between Parametric and Eaton is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Parametric Modity Strategy and Eaton Vance New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance New and Parametric Commodity 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 Parametric Modity Strategy 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 New has no effect on the direction of Parametric Commodity i.e., Parametric Commodity and Eaton Vance go up and down completely randomly.

Pair Corralation between Parametric Commodity and Eaton Vance

Assuming the 90 days horizon Parametric Modity Strategy is expected to generate 4.48 times more return on investment than Eaton Vance. However, Parametric Commodity is 4.48 times more volatile than Eaton Vance New. It trades about 0.1 of its potential returns per unit of risk. Eaton Vance New is currently generating about 0.28 per unit of risk. If you would invest  652.00  in Parametric Modity Strategy on February 20, 2024 and sell it today you would earn a total of  9.00  from holding Parametric Modity Strategy or generate 1.38% return on investment over 90 days.

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

Parametric Modity Strategy  vs.  Eaton Vance New

Parametric Commodity

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Parametric Modity Strategy are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Parametric Commodity may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Eaton Vance New

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance New are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Parametric Commodity and Eaton Vance

The main advantage of trading using opposite Parametric Commodity and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parametric Commodity 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 Parametric Modity Strategy and Eaton Vance New 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.