Correlation Between Eaton Vance and Franklin Missouri

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

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

Diversification Opportunities for Eaton Vance and Franklin Missouri

0.91

Correlation Coefficient

Eaton Vance  Franklin Missouri

Almost no diversification

The 3 months correlation between Eaton and Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Missouri and Franklin Missouri Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Missouri Tax 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 Missouri are associated (or correlated) with Franklin Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Missouri Tax has no effect on the direction of Eaton Vance i.e., Eaton Vance and Franklin Missouri go up and down completely randomly.

Pair Corralation between Eaton Vance and Franklin Missouri

Assuming the 90 days horizon Eaton Vance Missouri is expected to under-perform the Franklin Missouri. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eaton Vance Missouri is 1.07 times less risky than Franklin Missouri. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Franklin Missouri Tax Free is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,051  in Franklin Missouri Tax Free on September 26, 2024 and sell it today you would lose (12.00) from holding Franklin Missouri Tax Free or give up 1.14% of portfolio value over 90 days.

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

Eaton Vance Missouri  vs.  Franklin Missouri Tax Free

Eaton Vance Missouri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Missouri has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Missouri Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Missouri Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Missouri 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 Franklin Missouri

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

The idea behind Eaton Vance Missouri and Franklin Missouri Tax Free 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.