Correlation Between Eaton Vance and MFS Investment

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and MFS Investment 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 Eaton Vance and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eaton Vance California and MFS Investment Grade, you can compare the effects of market volatilities on Eaton Vance and MFS Investment 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 Eaton Vance with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and MFS Investment.

Diversification Opportunities for Eaton Vance and MFS Investment

0.51

Correlation Coefficient

Eaton Vance  MFS Investment

Very weak diversification

The 3 months correlation between Eaton and MFS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance California and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Eaton Vance 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 Eaton Vance California are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Eaton Vance i.e., Eaton Vance and MFS Investment go up and down completely randomly.

Pair Corralation between Eaton Vance and MFS Investment

Considering the 90-day investment horizon Eaton Vance California is expected to under-perform the MFS Investment. In addition to that, Eaton Vance is 1.2 times more volatile than MFS Investment Grade. It trades about -0.05 of its total potential returns per unit of risk. MFS Investment Grade is currently generating about 0.06 per unit of volatility. If you would invest  815.00  in MFS Investment Grade on September 12, 2024 and sell it today you would earn a total of  14.00  from holding MFS Investment Grade or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eaton Vance California  vs.  MFS Investment Grade

Eaton Vance California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance California has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MFS Investment Grade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eaton Vance and MFS Investment

The main advantage of trading using opposite Eaton Vance and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, MFS Investment 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 MFS Investment will offset losses from the drop in MFS Investment's long position.

The idea behind Eaton Vance California and MFS Investment Grade 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.