Correlation Between Vanguard 500 and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Eaton Vance Limited, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Eaton Vance.
Diversification Opportunities for Vanguard 500 and Eaton Vance
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Eaton is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Eaton Vance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Limited and Vanguard 500 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 Vanguard 500 Index 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 Limited has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Eaton Vance go up and down completely randomly.
Pair Corralation between Vanguard 500 and Eaton Vance
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 3.43 times more return on investment than Eaton Vance. However, Vanguard 500 is 3.43 times more volatile than Eaton Vance Limited. It trades about 0.15 of its potential returns per unit of risk. Eaton Vance Limited is currently generating about -0.12 per unit of risk. If you would invest 53,778 in Vanguard 500 Index on August 27, 2024 and sell it today you would earn a total of 1,407 from holding Vanguard 500 Index or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Eaton Vance Limited
Performance |
| Timeline |
| Vanguard 500 Index |
| Eaton Vance Limited |
Vanguard 500 and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Eaton Vance
The main advantage of trading using opposite Vanguard 500 and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Windsor Ii | Vanguard 500 vs. Vanguard Small Cap Index |
| Eaton Vance vs. Nuveen Minnesota Municipal | Eaton Vance vs. Baird Strategic Municipal | Eaton Vance vs. Franklin High Yield | Eaton Vance vs. Ishares Municipal Bond |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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