Correlation Between Eaton Vance and Vanguard Limited-term
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Vanguard Limited-term 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 Vanguard Limited-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance National and Vanguard Limited Term Tax Exempt, you can compare the effects of market volatilities on Eaton Vance and Vanguard Limited-term 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 Vanguard Limited-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Vanguard Limited-term.
Diversification Opportunities for Eaton Vance and Vanguard Limited-term
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Eaton and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Vanguard Limited Term Tax Exem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Limited Term 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 National are associated (or correlated) with Vanguard Limited-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Limited Term has no effect on the direction of Eaton Vance i.e., Eaton Vance and Vanguard Limited-term go up and down completely randomly.
Pair Corralation between Eaton Vance and Vanguard Limited-term
Assuming the 90 days horizon Eaton Vance National is expected to under-perform the Vanguard Limited-term. In addition to that, Eaton Vance is 1.33 times more volatile than Vanguard Limited Term Tax Exempt. It trades about -0.29 of its total potential returns per unit of risk. Vanguard Limited Term Tax Exempt is currently generating about -0.25 per unit of volatility. If you would invest 1,092 in Vanguard Limited Term Tax Exempt on October 9, 2024 and sell it today you would lose (6.00) from holding Vanguard Limited Term Tax Exempt or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance National vs. Vanguard Limited Term Tax Exem
Performance |
| Timeline |
| Eaton Vance National |
| Vanguard Limited Term |
Eaton Vance and Vanguard Limited-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Vanguard Limited-term
The main advantage of trading using opposite Eaton Vance and Vanguard Limited-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Vanguard Limited-term 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 Vanguard Limited-term will offset losses from the drop in Vanguard Limited-term's long position.| Eaton Vance vs. Eaton Vance National | Eaton Vance vs. Eaton Vance High | Eaton Vance vs. Eaton Vance Tax Managed | Eaton Vance vs. Eaton Vance Amt Free |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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