Correlation Between DWS Municipal and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both DWS Municipal 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 DWS Municipal and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Eaton Vance Tax, you can compare the effects of market volatilities on DWS Municipal 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 DWS Municipal with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Eaton Vance.
Diversification Opportunities for DWS Municipal and Eaton Vance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DWS and Eaton is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and DWS Municipal 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 DWS Municipal Income 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 Tax has no effect on the direction of DWS Municipal i.e., DWS Municipal and Eaton Vance go up and down completely randomly.
Pair Corralation between DWS Municipal and Eaton Vance
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 0.88 times more return on investment than Eaton Vance. However, DWS Municipal Income is 1.14 times less risky than Eaton Vance. It trades about 0.1 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.07 per unit of risk. If you would invest 792.00 in DWS Municipal Income on September 1, 2024 and sell it today you would earn a total of 214.00 from holding DWS Municipal Income or generate 27.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Eaton Vance Tax
Performance |
| Timeline |
| DWS Municipal Income |
| Eaton Vance Tax |
DWS Municipal and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Eaton Vance
The main advantage of trading using opposite DWS Municipal and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal 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.| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
| Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Blackrock Muniholdings Closed | Eaton Vance vs. DTF Tax Free | Eaton Vance vs. Eaton Vance Floating |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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