Correlation Between Eaton Vance and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Franklin Federal 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 Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Atlanta and Franklin Federal Limited Term, you can compare the effects of market volatilities on Eaton Vance and Franklin Federal 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 Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Franklin Federal.
Diversification Opportunities for Eaton Vance and Franklin Federal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eaton and FRANKLIN is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Atlanta and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim 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 Atlanta are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Eaton Vance i.e., Eaton Vance and Franklin Federal go up and down completely randomly.
Pair Corralation between Eaton Vance and Franklin Federal
Assuming the 90 days horizon Eaton Vance Atlanta is expected to generate 7.42 times more return on investment than Franklin Federal. However, Eaton Vance is 7.42 times more volatile than Franklin Federal Limited Term. It trades about 0.27 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.2 per unit of risk. If you would invest 3,199 in Eaton Vance Atlanta on August 28, 2024 and sell it today you would earn a total of 184.00 from holding Eaton Vance Atlanta or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Atlanta vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Eaton Vance Atlanta |
| Franklin Federal Lim |
Eaton Vance and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Franklin Federal
The main advantage of trading using opposite Eaton Vance and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Eaton Vance vs. Pro Blend Moderate Term | Eaton Vance vs. Transamerica Cleartrack Retirement | Eaton Vance vs. Saat Moderate Strategy | Eaton Vance vs. Wisdomtree Siegel Moderate |
| Franklin Federal vs. Small Cap Stock | Franklin Federal vs. Ips Strategic Capital | Franklin Federal vs. Morgan Stanley Institutional | Franklin Federal vs. Archer Balanced 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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