Correlation Between American Funds and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Government and Eaton Vance Government, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Eaton Vance.
Diversification Opportunities for American Funds and Eaton Vance
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Eaton is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and Eaton Vance Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Government and American Funds 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 American Funds Government 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 Government has no effect on the direction of American Funds i.e., American Funds and Eaton Vance go up and down completely randomly.
Pair Corralation between American Funds and Eaton Vance
Assuming the 90 days horizon American Funds Government is expected to generate 0.88 times more return on investment than Eaton Vance. However, American Funds Government is 1.14 times less risky than Eaton Vance. It trades about -0.13 of its potential returns per unit of risk. Eaton Vance Government is currently generating about -0.14 per unit of risk. If you would invest 1,191 in American Funds Government on August 24, 2024 and sell it today you would lose (9.00) from holding American Funds Government or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Government vs. Eaton Vance Government
Performance |
| Timeline |
| American Funds Government |
| Eaton Vance Government |
American Funds and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Eaton Vance
The main advantage of trading using opposite American Funds and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Vanguard Gnma Fund | American Funds vs. Us Government Securities | American Funds vs. Us Government Securities | American Funds vs. Us Government Securities |
| Eaton Vance vs. Vanguard Gnma Fund | Eaton Vance vs. Us Government Securities | Eaton Vance vs. Us Government Securities | Eaton Vance vs. Us Government Securities |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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