Correlation Between MFS Investment and Eaton Vance

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

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

Diversification Opportunities for MFS Investment and Eaton Vance

0.27

Correlation Coefficient

MFS Investment  Eaton Vance

Modest diversification

The 3 months correlation between MFS and Eaton is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and MFS Investment 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 MFS Investment Grade 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 Tax has no effect on the direction of MFS Investment i.e., MFS Investment and Eaton Vance go up and down completely randomly.

Pair Corralation between MFS Investment and Eaton Vance

Considering the 90-day investment horizon MFS Investment is expected to generate 1.05 times less return on investment than Eaton Vance. But when comparing it to its historical volatility, MFS Investment Grade is 1.2 times less risky than Eaton Vance. It trades about 0.08 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Eaton Vance Tax on August 31, 2024 and sell it today you would earn a total of  142.00  from holding Eaton Vance Tax or generate 19.86% return on investment over 90 days.

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

MFS Investment Grade  vs.  Eaton Vance Tax

MFS Investment Grade

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 7 (%) 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.

Eaton Vance Tax

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with MFS Investment and Eaton Vance

The main advantage of trading using opposite MFS Investment and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment 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 MFS Investment Grade and Eaton Vance Tax 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.