Correlation Between Eaton Vance and MFS Charter

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

By analyzing existing cross correlation between Eaton Vance National and MFS Charter Income, you can compare the effects of market volatilities on Eaton Vance and MFS Charter 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 Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and MFS Charter.

Diversification Opportunities for Eaton Vance and MFS Charter

0.63

Correlation Coefficient

Eaton Vance  MFS Charter

Poor diversification

The 3 months correlation between Eaton and MFS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income 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 National are associated (or correlated) with MFS Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and MFS Charter go up and down completely randomly.

Pair Corralation between Eaton Vance and MFS Charter

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.73 times less return on investment than MFS Charter. In addition to that, Eaton Vance is 1.02 times more volatile than MFS Charter Income. It trades about 0.02 of its total potential returns per unit of risk. MFS Charter Income is currently generating about 0.03 per unit of volatility. If you would invest  626.00  in MFS Charter Income on September 3, 2024 and sell it today you would earn a total of  6.00  from holding MFS Charter Income or generate 0.96% return on investment over 90 days.

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

Eaton Vance National  vs.  MFS Charter Income

Eaton Vance National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance National are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

MFS Charter Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, MFS Charter is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eaton Vance and MFS Charter

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

The idea behind Eaton Vance National and MFS Charter Income 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.