Correlation Between Eaton Vance and Ab Pennsylvania

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

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

Diversification Opportunities for Eaton Vance and Ab Pennsylvania

0.87

Correlation Coefficient

Eaton Vance  Ab Pennsylvania

Very poor diversification

The 3 months correlation between Eaton and APAAX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Municipal and Ab Pennsylvania Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Pennsylvania Portfolio 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 Municipal are associated (or correlated) with Ab Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Pennsylvania Portfolio has no effect on the direction of Eaton Vance i.e., Eaton Vance and Ab Pennsylvania go up and down completely randomly.

Pair Corralation between Eaton Vance and Ab Pennsylvania

Considering the 90-day investment horizon Eaton Vance Municipal is expected to generate 3.7 times more return on investment than Ab Pennsylvania. However, Eaton Vance is 3.7 times more volatile than Ab Pennsylvania Portfolio. It trades about 0.09 of its potential returns per unit of risk. Ab Pennsylvania Portfolio is currently generating about 0.04 per unit of risk. If you would invest  993.00  in Eaton Vance Municipal on December 28, 2024 and sell it today you would earn a total of  40.00  from holding Eaton Vance Municipal or generate 4.03% return on investment over 90 days.

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

Eaton Vance Municipal  vs.  Ab Pennsylvania Portfolio

Eaton Vance Municipal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Municipal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ab Pennsylvania Portfolio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Pennsylvania Portfolio are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Pennsylvania 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 Ab Pennsylvania

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

The idea behind Eaton Vance Municipal and Ab Pennsylvania Portfolio 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.