Correlation Between Eaton Vance and State Farm
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and State Farm 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 Eaton Vance and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Richard and State Farm Growth, you can compare the effects of market volatilities on Eaton Vance and State Farm 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 Eaton Vance with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and State Farm.
Diversification Opportunities for Eaton Vance and State Farm
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eaton and State is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Richard and State Farm Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Growth and Eaton Vance 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 Eaton Vance Richard are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Growth has no effect on the direction of Eaton Vance i.e., Eaton Vance and State Farm go up and down completely randomly.
Pair Corralation between Eaton Vance and State Farm
Assuming the 90 days horizon Eaton Vance Richard is expected to generate 0.52 times more return on investment than State Farm. However, Eaton Vance Richard is 1.94 times less risky than State Farm. It trades about -0.18 of its potential returns per unit of risk. State Farm Growth is currently generating about -0.19 per unit of risk. If you would invest 1,357 in Eaton Vance Richard on January 29, 2024 and sell it today you would lose (21.00) from holding Eaton Vance Richard or give up 1.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Eaton Vance Richard vs. State Farm Growth
Performance |
Timeline |
Eaton Vance Richard |
State Farm Growth |
Eaton Vance and State Farm Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eaton Vance and State Farm
The main advantage of trading using opposite Eaton Vance and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, State Farm 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 State Farm will offset losses from the drop in State Farm's long position.Eaton Vance vs. Eaton Vance Msschsts | Eaton Vance vs. Eaton Vance Municipal | Eaton Vance vs. Eaton Vance Municipal | Eaton Vance vs. Eaton Vance Municipal |
State Farm vs. State Farm Balanced | State Farm vs. State Farm Municipal | State Farm vs. State Farm Interim | State Farm vs. Fidelity Zero Total |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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