Correlation Between Eaton Vance and American Mutual

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Can any of the company-specific risk be diversified away by investing in both Eaton Vance and American Mutual 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 American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Large and American Mutual, you can compare the effects of market volatilities on Eaton Vance and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and American Mutual.

Diversification Opportunities for Eaton Vance and American Mutual

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Eaton and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Large and American Mutual in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 Large are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Eaton Vance i.e., Eaton Vance and American Mutual go up and down completely randomly.

Pair Corralation between Eaton Vance and American Mutual

If you would invest  0.00  in Eaton Vance Large on February 17, 2022 and sell it today you would earn a total of  0.00  from holding Eaton Vance Large or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Eaton Vance Large  vs.  American Mutual

 Performance (%) 
      Timeline 
Eaton Vance Large 
Eaton Performance
0 of 100
Over the last 90 days Eaton Vance Large has generated negative risk-adjusted returns adding no value to fund investors. 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.
American Mutual 
American Performance
0 of 100
Over the last 90 days American Mutual has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Price Channel

Eaton Vance and American Mutual Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Eaton Vance and American Mutual

The main advantage of trading using opposite Eaton Vance and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.

Eaton Vance Large

Pair trading matchups for Eaton Vance

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Eaton Vance as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Eaton Vance's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Eaton Vance's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Eaton Vance Large.
The idea behind Eaton Vance Large and American Mutual 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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