Correlation Between Dow Jones and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Eaton Vance Tax, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eaton Vance.
Diversification Opportunities for Dow Jones and Eaton Vance
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and Dow Jones 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 Dow Jones Industrial 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 Tax has no effect on the direction of Dow Jones i.e., Dow Jones and Eaton Vance go up and down completely randomly.
Pair Corralation between Dow Jones and Eaton Vance
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.84 times more return on investment than Eaton Vance. However, Dow Jones Industrial is 1.18 times less risky than Eaton Vance. It trades about 0.08 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.05 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eaton Vance Tax
Performance |
| Timeline |
Dow Jones and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eaton Vance Tax
Pair trading matchups for Eaton Vance
Pair Trading with Dow Jones and Eaton Vance
The main advantage of trading using opposite Dow Jones and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Eaton Vance vs. MFS Investment Grade | Eaton Vance vs. Eaton Vance National | Eaton Vance vs. Blackrock Muniyield Quality | Eaton Vance vs. Munivest Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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