Correlation Between Eaton Vance and BlackRock Municipal

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

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

Diversification Opportunities for Eaton Vance and BlackRock Municipal

0.85

Correlation Coefficient

Eaton Vance  BlackRock Municipal

Very poor diversification

The 3 months correlation between Eaton and BlackRock is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance California and BlackRock Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Municipal 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 California are associated (or correlated) with BlackRock Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Municipal has no effect on the direction of Eaton Vance i.e., Eaton Vance and BlackRock Municipal go up and down completely randomly.

Pair Corralation between Eaton Vance and BlackRock Municipal

Considering the 90-day investment horizon Eaton Vance is expected to generate 15.0 times less return on investment than BlackRock Municipal. But when comparing it to its historical volatility, Eaton Vance California is 1.23 times less risky than BlackRock Municipal. It trades about 0.0 of its potential returns per unit of risk. BlackRock Municipal Income is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,036  in BlackRock Municipal Income on September 2, 2024 and sell it today you would earn a total of  9.00  from holding BlackRock Municipal Income or generate 0.87% return on investment over 90 days.

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

Eaton Vance California  vs.  BlackRock Municipal Income

Eaton Vance California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance California has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BlackRock Municipal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Municipal Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, BlackRock Municipal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eaton Vance and BlackRock Municipal

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

The idea behind Eaton Vance California and BlackRock Municipal 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 Commodity Directory module to find actively traded commodities issued by global exchanges.