Correlation Between Vanguard Intermediate-ter and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate-ter 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 Intermediate-ter 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 Intermediate Term Tax Exempt and Eaton Vance Municipal, you can compare the effects of market volatilities on Vanguard Intermediate-ter 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 Intermediate-ter with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate-ter and Eaton Vance.
Diversification Opportunities for Vanguard Intermediate-ter and Eaton Vance
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Tax 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 Vanguard Intermediate-ter 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 Intermediate Term 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 Municipal has no effect on the direction of Vanguard Intermediate-ter i.e., Vanguard Intermediate-ter and Eaton Vance go up and down completely randomly.
Pair Corralation between Vanguard Intermediate-ter and Eaton Vance
Assuming the 90 days horizon Vanguard Intermediate-ter is expected to generate 1.2 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, Vanguard Intermediate Term Tax Exempt is 1.35 times less risky than Eaton Vance. It trades about 0.17 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Eaton Vance Municipal on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Eaton Vance Municipal or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Tax vs. Eaton Vance Municipal
Performance |
| Timeline |
| Vanguard Intermediate-ter |
| Eaton Vance Municipal |
Vanguard Intermediate-ter and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate-ter and Eaton Vance
The main advantage of trading using opposite Vanguard Intermediate-ter and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate-ter 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 Intermediate Term Tax Exempt and Eaton Vance Municipal 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.
| Eaton Vance vs. Vanguard Intermediate Term Tax Exempt | Eaton Vance vs. Vanguard Intermediate Term Tax Exempt | Eaton Vance vs. Tax Exempt Bond | Eaton Vance vs. Tax Exempt 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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