Correlation Between Gmo High and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Eaton Vance Municipal, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Eaton Vance.
Diversification Opportunities for Gmo High and Eaton Vance
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and Eaton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield 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 Gmo High 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 Gmo High Yield 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 Gmo High i.e., Gmo High and Eaton Vance go up and down completely randomly.
Pair Corralation between Gmo High and Eaton Vance
Assuming the 90 days horizon Gmo High is expected to generate 1.36 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Gmo High Yield is 1.71 times less risky than Eaton Vance. It trades about 0.18 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Eaton Vance Municipal on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Eaton Vance Municipal or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Eaton Vance Municipal
Performance |
| Timeline |
| Gmo High Yield |
| Eaton Vance Municipal |
Gmo High and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Eaton Vance
The main advantage of trading using opposite Gmo High and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Lifestyle Ii Moderate | Gmo High vs. Franklin Lifesmart Retirement | Gmo High vs. Pgim Conservative Retirement | Gmo High vs. Target Retirement 2040 |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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