Correlation Between Metropolitan West and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Eaton Vance Income, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Eaton Vance.
Diversification Opportunities for Metropolitan West and Eaton Vance
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metropolitan and Eaton is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Eaton Vance Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Income and Metropolitan West 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 Metropolitan West Total 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 Income has no effect on the direction of Metropolitan West i.e., Metropolitan West and Eaton Vance go up and down completely randomly.
Pair Corralation between Metropolitan West and Eaton Vance
Assuming the 90 days horizon Metropolitan West is expected to generate 1.81 times less return on investment than Eaton Vance. In addition to that, Metropolitan West is 1.95 times more volatile than Eaton Vance Income. It trades about 0.05 of its total potential returns per unit of risk. Eaton Vance Income is currently generating about 0.19 per unit of volatility. If you would invest 473.00 in Eaton Vance Income on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Eaton Vance Income or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. Eaton Vance Income
Performance |
| Timeline |
| Metropolitan West Total |
| Eaton Vance Income |
Metropolitan West and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Eaton Vance
The main advantage of trading using opposite Metropolitan West and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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