Correlation Between Nuveen California and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Nuveen California 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 Nuveen California and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen California Select and Eaton Vance Tax, you can compare the effects of market volatilities on Nuveen California 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 Nuveen California with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and Eaton Vance.
Diversification Opportunities for Nuveen California and Eaton Vance
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nuveen and Eaton is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select 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 Nuveen California 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 Nuveen California Select 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 Nuveen California i.e., Nuveen California and Eaton Vance go up and down completely randomly.
Pair Corralation between Nuveen California and Eaton Vance
Considering the 90-day investment horizon Nuveen California is expected to generate 3.5 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Nuveen California Select is 1.1 times less risky than Eaton Vance. It trades about 0.04 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,059 in Eaton Vance Tax on August 31, 2024 and sell it today you would earn a total of 454.00 from holding Eaton Vance Tax or generate 42.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen California Select vs. Eaton Vance Tax
Performance |
| Timeline |
| Nuveen California Select |
| Eaton Vance Tax |
Nuveen California and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen California and Eaton Vance
The main advantage of trading using opposite Nuveen California and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California 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.| Nuveen California vs. Eaton Vance National | Nuveen California vs. Invesco High Income | Nuveen California vs. Blackrock Muniholdings Ny | Nuveen California vs. MFS Investment Grade |
| Eaton Vance vs. Eaton Vance Tax | Eaton Vance vs. Eaton Vance Tax Managed | Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Eaton Vance Tax |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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