Correlation Between Prudential High and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Prudential High 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 Prudential High and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and Eaton Vance Income, you can compare the effects of market volatilities on Prudential High 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 Prudential High with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Eaton Vance.
Diversification Opportunities for Prudential High and Eaton Vance
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Eaton is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield 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 Prudential High 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 Prudential High Yield 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 Prudential High i.e., Prudential High and Eaton Vance go up and down completely randomly.
Pair Corralation between Prudential High and Eaton Vance
Assuming the 90 days horizon Prudential High Yield is expected to generate 1.04 times more return on investment than Eaton Vance. However, Prudential High is 1.04 times more volatile than Eaton Vance Income. It trades about 0.18 of its potential returns per unit of risk. Eaton Vance Income is currently generating about 0.17 per unit of risk. If you would invest 451.00 in Prudential High Yield on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Prudential High Yield or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Prudential High Yield vs. Eaton Vance Income
Performance |
| Timeline |
| Prudential High Yield |
| Eaton Vance Income |
Prudential High and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Eaton Vance
The main advantage of trading using opposite Prudential High and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High 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.| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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