Correlation Between Microsoft and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Eaton Vance Large Cap, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Eaton Vance.
Diversification Opportunities for Microsoft and Eaton Vance
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Eaton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Eaton Vance Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Large and Microsoft 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 Microsoft 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 Large has no effect on the direction of Microsoft i.e., Microsoft and Eaton Vance go up and down completely randomly.
Pair Corralation between Microsoft and Eaton Vance
Given the investment horizon of 90 days Microsoft is expected to generate 1.9 times more return on investment than Eaton Vance. However, Microsoft is 1.9 times more volatile than Eaton Vance Large Cap. It trades about 0.08 of its potential returns per unit of risk. Eaton Vance Large Cap is currently generating about 0.06 per unit of risk. If you would invest 24,843 in Microsoft on September 2, 2024 and sell it today you would earn a total of 17,503 from holding Microsoft or generate 70.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Eaton Vance Large Cap
Performance |
| Timeline |
| Microsoft |
| Eaton Vance Large |
Microsoft and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Eaton Vance
The main advantage of trading using opposite Microsoft and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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