Correlation Between Eaton Vance and Nuveen Municipal

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

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

Diversification Opportunities for Eaton Vance and Nuveen Municipal

-0.09

Correlation Coefficient

Eaton Vance  Nuveen Municipal

Good diversification

The 3 months correlation between Eaton and Nuveen is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Risk and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit 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 Risk are associated (or correlated) with Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal Credit has no effect on the direction of Eaton Vance i.e., Eaton Vance and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Eaton Vance and Nuveen Municipal

Considering the 90-day investment horizon Eaton Vance Risk is expected to under-perform the Nuveen Municipal. In addition to that, Eaton Vance is 1.04 times more volatile than Nuveen Municipal Credit. It trades about -0.09 of its total potential returns per unit of risk. Nuveen Municipal Credit is currently generating about -0.03 per unit of volatility. If you would invest  1,280  in Nuveen Municipal Credit on December 4, 2024 and sell it today you would lose (14.00) from holding Nuveen Municipal Credit or give up 1.09% of portfolio value over 90 days.

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

Eaton Vance Risk  vs.  Nuveen Municipal Credit

Eaton Vance Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Risk has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Nuveen Municipal Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Municipal Credit has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eaton Vance and Nuveen Municipal

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

The idea behind Eaton Vance Risk and Nuveen Municipal Credit 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.