Correlation Between Kentucky Tax-free and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free 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 Kentucky Tax-free and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentucky Tax Free Income and Eaton Vance Missouri, you can compare the effects of market volatilities on Kentucky Tax-free 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 Kentucky Tax-free with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and Eaton Vance.
Diversification Opportunities for Kentucky Tax-free and Eaton Vance
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kentucky and Eaton is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income and Eaton Vance Missouri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Missouri and Kentucky Tax-free 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 Kentucky Tax Free 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 Missouri has no effect on the direction of Kentucky Tax-free i.e., Kentucky Tax-free and Eaton Vance go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and Eaton Vance
Assuming the 90 days horizon Kentucky Tax-free is expected to generate 1.49 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Kentucky Tax Free Income is 1.07 times less risky than Eaton Vance. It trades about 0.11 of its potential returns per unit of risk. Eaton Vance Missouri is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 863.00 in Eaton Vance Missouri on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Eaton Vance Missouri or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. Eaton Vance Missouri
Performance |
| Timeline |
| Kentucky Tax Free |
| Eaton Vance Missouri |
Kentucky Tax-free and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and Eaton Vance
The main advantage of trading using opposite Kentucky Tax-free and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free 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.| Kentucky Tax-free vs. Kentucky Tax Free Short To Medium | Kentucky Tax-free vs. North Carolina Tax Free | Kentucky Tax-free vs. Intermediate Government Bond | Kentucky Tax-free vs. Taxable Municipal Bond |
| Eaton Vance vs. Eaton Vance Msschsts | Eaton Vance vs. Eaton Vance Municipal | Eaton Vance vs. Eaton Vance Municipal | Eaton Vance vs. Eaton Vance Municipal |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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