Correlation Between Eaton Vance and MFS Intermediate

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and MFS Intermediate 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 Intermediate 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 Intermediate Income, you can compare the effects of market volatilities on Eaton Vance and MFS Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and MFS Intermediate.

Diversification Opportunities for Eaton Vance and MFS Intermediate

0.48

Correlation Coefficient

Eaton Vance  MFS Intermediate

Very weak diversification

The 3 months correlation between Eaton and MFS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate 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 Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and MFS Intermediate go up and down completely randomly.

Pair Corralation between Eaton Vance and MFS Intermediate

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.41 times less return on investment than MFS Intermediate. But when comparing it to its historical volatility, Eaton Vance National is 1.14 times less risky than MFS Intermediate. It trades about 0.04 of its potential returns per unit of risk. MFS Intermediate Income is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  230.00  in MFS Intermediate Income on December 2, 2024 and sell it today you would earn a total of  40.00  from holding MFS Intermediate Income or generate 17.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Eaton Vance National  vs.  MFS Intermediate Income

Eaton Vance National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Intermediate Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Intermediate Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and MFS Intermediate

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

The idea behind Eaton Vance National and MFS Intermediate 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.