Correlation Between Federated Premier and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Eaton Vance 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 Federated Premier and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and Eaton Vance Municipal, you can compare the effects of market volatilities on Federated Premier and Eaton Vance 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 Federated Premier with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Eaton Vance.
Diversification Opportunities for Federated Premier and Eaton Vance
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Eaton is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Eaton Vance Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Municipal and Federated Premier 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 Federated Premier Municipal are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Municipal has no effect on the direction of Federated Premier i.e., Federated Premier and Eaton Vance go up and down completely randomly.
Pair Corralation between Federated Premier and Eaton Vance
Considering the 90-day investment horizon Federated Premier Municipal is expected to generate 1.16 times more return on investment than Eaton Vance. However, Federated Premier is 1.16 times more volatile than Eaton Vance Municipal. It trades about 0.05 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.05 per unit of risk. If you would invest 1,001 in Federated Premier Municipal on August 28, 2024 and sell it today you would earn a total of 111.00 from holding Federated Premier Municipal or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Federated Premier Municipal vs. Eaton Vance Municipal
Performance |
| Timeline |
| Federated Premier |
| Eaton Vance Municipal |
Federated Premier and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Eaton Vance
The main advantage of trading using opposite Federated Premier and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.| Federated Premier vs. DTF Tax Free | Federated Premier vs. MFS High Yield | Federated Premier vs. MFS High Income | Federated Premier vs. John Hancock Income |
| Eaton Vance vs. MFS Investment Grade | Eaton Vance vs. Invesco High Income | Eaton Vance vs. Federated Premier Municipal | Eaton Vance vs. Nuveen California Select |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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