Correlation Between American Funds and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Eaton Vance Municipal, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Eaton Vance.
Diversification Opportunities for American Funds and Eaton Vance
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Eaton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Eaton Vance Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Municipal and American Funds 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 American Funds Retirement 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 Municipal has no effect on the direction of American Funds i.e., American Funds and Eaton Vance go up and down completely randomly.
Pair Corralation between American Funds and Eaton Vance
Assuming the 90 days horizon American Funds Retirement is expected to generate 1.64 times more return on investment than Eaton Vance. However, American Funds is 1.64 times more volatile than Eaton Vance Municipal. It trades about 0.14 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.12 per unit of risk. If you would invest 1,204 in American Funds Retirement on September 3, 2024 and sell it today you would earn a total of 81.00 from holding American Funds Retirement or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Eaton Vance Municipal
Performance |
| Timeline |
| American Funds Retirement |
| Eaton Vance Municipal |
American Funds and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Eaton Vance
The main advantage of trading using opposite American Funds and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ab Global Real | American Funds vs. Ab Global Real | American Funds vs. Qs Global Equity |
| Eaton Vance vs. Pace Smallmedium Value | Eaton Vance vs. Ultrasmall Cap Profund Ultrasmall Cap | Eaton Vance vs. Lord Abbett Small | Eaton Vance vs. Ultramid Cap Profund Ultramid Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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