Correlation Between Eaton Vance and Vanguard Ohio

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

Diversification Opportunities for Eaton Vance and Vanguard Ohio

0.73

Correlation Coefficient

Eaton Vance  Vanguard Ohio

Poor diversification

The 3 months correlation between Eaton and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Ohio and Vanguard Ohio Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Ohio Long 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 Vanguard Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Ohio Long has no effect on the direction of Eaton Vance i.e., Eaton Vance and Vanguard Ohio go up and down completely randomly.

Pair Corralation between Eaton Vance and Vanguard Ohio

Assuming the 90 days horizon Eaton Vance Ohio is expected to under-perform the Vanguard Ohio. But the mutual fund apears to be less risky and, when comparing its historical volatility, Eaton Vance Ohio is 1.22 times less risky than Vanguard Ohio. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Vanguard Ohio Long Term is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,175  in Vanguard Ohio Long Term on October 8, 2024 and sell it today you would lose (8.00) from holding Vanguard Ohio Long Term or give up 0.68% 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.  Vanguard Ohio Long Term

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.

Vanguard Ohio Long

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Eaton Vance Ohio and Vanguard Ohio Long Term 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.