Correlation Between Western Asset and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Eaton Vance Small Cap, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Eaton Vance.
Diversification Opportunities for Western Asset and Eaton Vance
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Eaton is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Eaton Vance Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Small and Western Asset 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 Western Asset Diversified 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 Small has no effect on the direction of Western Asset i.e., Western Asset and Eaton Vance go up and down completely randomly.
Pair Corralation between Western Asset and Eaton Vance
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Eaton Vance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 3.88 times less risky than Eaton Vance. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Eaton Vance Small Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Eaton Vance Small Cap on September 3, 2024 and sell it today you would earn a total of 187.00 from holding Eaton Vance Small Cap or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Eaton Vance Small Cap
Performance |
| Timeline |
| Western Asset Diversified |
| Eaton Vance Small |
Western Asset and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Eaton Vance
The main advantage of trading using opposite Western Asset and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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