Correlation Between Madison Diversified and Eaton Vance

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

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

Diversification Opportunities for Madison Diversified and Eaton Vance

0.09

Correlation Coefficient

Madison Diversified  Eaton Vance

Significant diversification

The 3 months correlation between Madison and Eaton is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Madison Diversified Income and Eaton Vance Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Floating and Madison Diversified 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 Madison Diversified Income 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 Floating has no effect on the direction of Madison Diversified i.e., Madison Diversified and Eaton Vance go up and down completely randomly.

Pair Corralation between Madison Diversified and Eaton Vance

Assuming the 90 days horizon Madison Diversified is expected to generate 2.13 times less return on investment than Eaton Vance. In addition to that, Madison Diversified is 2.39 times more volatile than Eaton Vance Floating Rate. It trades about 0.04 of its total potential returns per unit of risk. Eaton Vance Floating Rate is currently generating about 0.19 per unit of volatility. If you would invest  739.00  in Eaton Vance Floating Rate on October 10, 2024 and sell it today you would earn a total of  128.00  from holding Eaton Vance Floating Rate or generate 17.32% return on investment over 90 days.

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

Madison Diversified Income  vs.  Eaton Vance Floating Rate

Madison Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance Floating

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating Rate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential 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 Madison Diversified and Eaton Vance

The main advantage of trading using opposite Madison Diversified and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Diversified 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 Madison Diversified Income and Eaton Vance Floating Rate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.