Correlation Between Franklin Missouri and Eaton Vance

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

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

Diversification Opportunities for Franklin Missouri and Eaton Vance

0.91

Correlation Coefficient

Franklin Missouri  Eaton Vance

Almost no diversification

The 3 months correlation between Franklin and Eaton is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Missouri Tax Free and Eaton Vance Missouri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Missouri and Franklin Missouri 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 Franklin Missouri Tax Free 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 Missouri has no effect on the direction of Franklin Missouri i.e., Franklin Missouri and Eaton Vance go up and down completely randomly.

Pair Corralation between Franklin Missouri and Eaton Vance

Assuming the 90 days horizon Franklin Missouri Tax Free is expected to generate 1.09 times more return on investment than Eaton Vance. However, Franklin Missouri is 1.09 times more volatile than Eaton Vance Missouri. It trades about 0.06 of its potential returns per unit of risk. Eaton Vance Missouri is currently generating about 0.04 per unit of risk. If you would invest  969.00  in Franklin Missouri Tax Free on September 26, 2024 and sell it today you would earn a total of  70.00  from holding Franklin Missouri Tax Free or generate 7.22% return on investment over 90 days.

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

Franklin Missouri Tax Free  vs.  Eaton Vance Missouri

Franklin Missouri Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Missouri Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Missouri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Missouri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Missouri has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Franklin Missouri and Eaton Vance

The main advantage of trading using opposite Franklin Missouri and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Missouri 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 Franklin Missouri Tax Free and Eaton Vance Missouri 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.