Correlation Between NVIDIA and Eaton Vance

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

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

Diversification Opportunities for NVIDIA and Eaton Vance

0.9

Correlation Coefficient

NVIDIA  Eaton Vance

Almost no diversification

The 3 months correlation between NVIDIA and Eaton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Eaton Vance Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Val and NVIDIA 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 NVIDIA 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 Val has no effect on the direction of NVIDIA i.e., NVIDIA and Eaton Vance go up and down completely randomly.

Pair Corralation between NVIDIA and Eaton Vance

Given the investment horizon of 90 days NVIDIA is expected to generate 3.09 times more return on investment than Eaton Vance. However, NVIDIA is 3.09 times more volatile than Eaton Vance Val. It trades about 0.11 of its potential returns per unit of risk. Eaton Vance Val is currently generating about 0.02 per unit of risk. If you would invest  18,392  in NVIDIA on January 17, 2024 and sell it today you would earn a total of  67,609  from holding NVIDIA or generate 367.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

NVIDIA  vs.  Eaton Vance Val

NVIDIA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Val

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Val are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with NVIDIA and Eaton Vance

The main advantage of trading using opposite NVIDIA and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA and Eaton Vance Val 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.