Correlation Between Eaton Vance and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Metropolitan West 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 Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Income and Metropolitan West Total, you can compare the effects of market volatilities on Eaton Vance and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Metropolitan West.
Diversification Opportunities for Eaton Vance and Metropolitan West
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eaton and Metropolitan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Income and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Income are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Eaton Vance i.e., Eaton Vance and Metropolitan West go up and down completely randomly.
Pair Corralation between Eaton Vance and Metropolitan West
Assuming the 90 days horizon Eaton Vance Income is expected to generate 0.51 times more return on investment than Metropolitan West. However, Eaton Vance Income is 1.95 times less risky than Metropolitan West. It trades about 0.19 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.05 per unit of risk. If you would invest 473.00 in Eaton Vance Income on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Eaton Vance Income or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Income vs. Metropolitan West Total
Performance |
| Timeline |
| Eaton Vance Income |
| Metropolitan West Total |
Eaton Vance and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Metropolitan West
The main advantage of trading using opposite Eaton Vance and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West'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 |
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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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