Correlation Between BlackRock Municipal and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both BlackRock Municipal 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 BlackRock Municipal and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Municipal Income and Eaton Vance Municipal, you can compare the effects of market volatilities on BlackRock Municipal 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 BlackRock Municipal with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Municipal and Eaton Vance.
Diversification Opportunities for BlackRock Municipal and Eaton Vance
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BlackRock and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Municipal Income and Eaton Vance Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Municipal and BlackRock Municipal 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 BlackRock Municipal Income 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 Municipal has no effect on the direction of BlackRock Municipal i.e., BlackRock Municipal and Eaton Vance go up and down completely randomly.
Pair Corralation between BlackRock Municipal and Eaton Vance
Considering the 90-day investment horizon BlackRock Municipal is expected to generate 1.84 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, BlackRock Municipal Income is 1.16 times less risky than Eaton Vance. It trades about 0.04 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 973.00 in Eaton Vance Municipal on August 27, 2024 and sell it today you would earn a total of 66.00 from holding Eaton Vance Municipal or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Municipal Income vs. Eaton Vance Municipal
Performance |
| Timeline |
| BlackRock Municipal |
| Eaton Vance Municipal |
BlackRock Municipal and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Municipal and Eaton Vance
The main advantage of trading using opposite BlackRock Municipal and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Municipal 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 BlackRock Municipal Income and Eaton Vance Municipal 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.
| Eaton Vance vs. Munivest Fund | Eaton Vance vs. Blackrock Muniyield Quality | Eaton Vance vs. Blackrock Muniyield Quality | Eaton Vance vs. Blackrock Muniholdings Closed |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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