Correlation Between Vanguard High-yield and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield 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 High-yield 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 High Yield Tax Exempt and Eaton Vance Tabs, you can compare the effects of market volatilities on Vanguard High-yield 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 High-yield with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Eaton Vance.
Diversification Opportunities for Vanguard High-yield and Eaton Vance
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Eaton is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Eaton Vance Tabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tabs and Vanguard High-yield 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 High Yield Tax Exempt 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 Tabs has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Eaton Vance go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Eaton Vance
If you would invest 1,014 in Vanguard High Yield Tax Exempt on September 3, 2024 and sell it today you would earn a total of 74.00 from holding Vanguard High Yield Tax Exempt or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Vanguard High Yield Tax Exempt vs. Eaton Vance Tabs
Performance |
| Timeline |
| Vanguard High Yield |
| Eaton Vance Tabs |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vanguard High-yield and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Eaton Vance
The main advantage of trading using opposite Vanguard High-yield and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield 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.The idea behind Vanguard High Yield Tax Exempt and Eaton Vance Tabs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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