Correlation Between Eaton Vance and Vanguard Short-term

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

By analyzing existing cross correlation between Eaton Vance Short and Vanguard Short Term Government, you can compare the effects of market volatilities on Eaton Vance and Vanguard Short-term 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 Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Vanguard Short-term.

Diversification Opportunities for Eaton Vance and Vanguard Short-term

0.74

Correlation Coefficient

Eaton Vance  Vanguard Short-term

Poor diversification

The 3 months correlation between Eaton and Vanguard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Short and Vanguard Short Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Short are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Eaton Vance i.e., Eaton Vance and Vanguard Short-term go up and down completely randomly.

Pair Corralation between Eaton Vance and Vanguard Short-term

Assuming the 90 days horizon Eaton Vance Short is expected to generate 2.53 times more return on investment than Vanguard Short-term. However, Eaton Vance is 2.53 times more volatile than Vanguard Short Term Government. It trades about 0.24 of its potential returns per unit of risk. Vanguard Short Term Government is currently generating about 0.31 per unit of risk. If you would invest  707.00  in Eaton Vance Short on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Eaton Vance Short or generate 3.11% return on investment over 90 days.

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

Eaton Vance Short  vs.  Vanguard Short Term Government

Eaton Vance Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Short are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Government are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Vanguard Short-term

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

The idea behind Eaton Vance Short and Vanguard Short Term Government 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.