Correlation Between Matson Money and Eaton Vance

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

By analyzing existing cross correlation between Matson Money Equity and Eaton Vance Multi Strategy, you can compare the effects of market volatilities on Matson Money and Eaton Vance 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 Matson Money with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Eaton Vance.

Diversification Opportunities for Matson Money and Eaton Vance

0.81

Correlation Coefficient

Matson Money  Eaton Vance

Very poor diversification

The 3 months correlation between Matson and Eaton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Eaton Vance Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Multi and Matson Money 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 Matson Money Equity are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Multi has no effect on the direction of Matson Money i.e., Matson Money and Eaton Vance go up and down completely randomly.

Pair Corralation between Matson Money and Eaton Vance

Assuming the 90 days horizon Matson Money Equity is expected to under-perform the Eaton Vance. In addition to that, Matson Money is 10.78 times more volatile than Eaton Vance Multi Strategy. It trades about -0.32 of its total potential returns per unit of risk. Eaton Vance Multi Strategy is currently generating about -0.18 per unit of volatility. If you would invest  992.00  in Eaton Vance Multi Strategy on September 27, 2024 and sell it today you would lose (3.00) from holding Eaton Vance Multi Strategy or give up 0.3% of portfolio value over 90 days.

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

Matson Money Equity  vs.  Eaton Vance Multi Strategy

Matson Money Equity

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Multi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Multi Strategy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matson Money and Eaton Vance

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

The idea behind Matson Money Equity and Eaton Vance Multi Strategy 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.