Correlation Between Eaton Vance and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and DWS Municipal 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 DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Short and DWS Municipal Income, you can compare the effects of market volatilities on Eaton Vance and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and DWS Municipal.
Diversification Opportunities for Eaton Vance and DWS Municipal
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eaton and DWS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Short and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 Short are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and DWS Municipal go up and down completely randomly.
Pair Corralation between Eaton Vance and DWS Municipal
Considering the 90-day investment horizon Eaton Vance is expected to generate 30.39 times less return on investment than DWS Municipal. But when comparing it to its historical volatility, Eaton Vance Short is 1.05 times less risky than DWS Municipal. It trades about 0.01 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 963.00 in DWS Municipal Income on August 31, 2024 and sell it today you would earn a total of 37.00 from holding DWS Municipal Income or generate 3.84% 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 Short vs. DWS Municipal Income
Performance |
| Timeline |
| Eaton Vance Short |
| DWS Municipal Income |
Eaton Vance and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and DWS Municipal
The main advantage of trading using opposite Eaton Vance and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Eaton Vance vs. Eaton Vance National | Eaton Vance vs. Invesco High Income | Eaton Vance vs. Blackrock Muniholdings Ny | Eaton Vance vs. Nuveen California Select |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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