Correlation Between Eaton Vance and Tax-exempt Fund
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Tax-exempt Fund 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 Tax-exempt Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Municipal and Tax Exempt Fund Of, you can compare the effects of market volatilities on Eaton Vance and Tax-exempt Fund 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 Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Tax-exempt Fund.
Diversification Opportunities for Eaton Vance and Tax-exempt Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eaton and Tax-exempt is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Municipal and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund 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 Municipal are associated (or correlated) with Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of Eaton Vance i.e., Eaton Vance and Tax-exempt Fund go up and down completely randomly.
Pair Corralation between Eaton Vance and Tax-exempt Fund
Assuming the 90 days horizon Eaton Vance Municipal is expected to generate 1.08 times more return on investment than Tax-exempt Fund. However, Eaton Vance is 1.08 times more volatile than Tax Exempt Fund Of. It trades about 0.06 of its potential returns per unit of risk. Tax Exempt Fund Of is currently generating about 0.05 per unit of risk. If you would invest 1,100 in Eaton Vance Municipal on November 1, 2024 and sell it today you would earn a total of 32.00 from holding Eaton Vance Municipal or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Municipal vs. Tax Exempt Fund Of
Performance |
| Timeline |
| Eaton Vance Municipal |
| Tax Exempt Fund |
Eaton Vance and Tax-exempt Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Tax-exempt Fund
The main advantage of trading using opposite Eaton Vance and Tax-exempt Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Tax-exempt Fund 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 Tax-exempt Fund will offset losses from the drop in Tax-exempt Fund's long position.| Eaton Vance vs. Davenport Small Cap | Eaton Vance vs. Lord Abbett Diversified | Eaton Vance vs. Stone Ridge Diversified | Eaton Vance vs. Madison Diversified Income |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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