Correlation Between Eaton Vance and Franklin Ohio

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

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

Diversification Opportunities for Eaton Vance and Franklin Ohio

0.77

Correlation Coefficient

Eaton Vance  Franklin Ohio

Poor diversification

The 3 months correlation between Eaton and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Ohio and Franklin Ohio Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Ohio 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 Ohio are associated (or correlated) with Franklin Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Ohio Tax has no effect on the direction of Eaton Vance i.e., Eaton Vance and Franklin Ohio go up and down completely randomly.

Pair Corralation between Eaton Vance and Franklin Ohio

Assuming the 90 days horizon Eaton Vance Ohio is expected to under-perform the Franklin Ohio. In addition to that, Eaton Vance is 1.08 times more volatile than Franklin Ohio Tax Free. It trades about -0.31 of its total potential returns per unit of risk. Franklin Ohio Tax Free is currently generating about -0.33 per unit of volatility. If you would invest  1,165  in Franklin Ohio Tax Free on October 8, 2024 and sell it today you would lose (19.00) from holding Franklin Ohio Tax Free or give up 1.63% of portfolio value over 90 days.

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

Eaton Vance Ohio  vs.  Franklin Ohio Tax Free

Eaton Vance Ohio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Ohio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical 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 Ohio Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Eaton Vance Ohio and Franklin Ohio 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.