Correlation Between M Large and Eaton Vance

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

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

Diversification Opportunities for M Large and Eaton Vance

-0.51

Correlation Coefficient

M Large  Eaton Vance

Excellent diversification

The 3 months correlation between MTCGX and Eaton is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Eaton Vance Tabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tabs and M Large 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 M Large Cap 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 Tabs has no effect on the direction of M Large i.e., M Large and Eaton Vance go up and down completely randomly.

Pair Corralation between M Large and Eaton Vance

Assuming the 90 days horizon M Large Cap is expected to under-perform the Eaton Vance. In addition to that, M Large is 12.97 times more volatile than Eaton Vance Tabs. It trades about -0.13 of its total potential returns per unit of risk. Eaton Vance Tabs is currently generating about 0.16 per unit of volatility. If you would invest  991.00  in Eaton Vance Tabs on December 21, 2024 and sell it today you would earn a total of  15.00  from holding Eaton Vance Tabs or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

M Large Cap  vs.  Eaton Vance Tabs

M Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days M Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Eaton Vance Tabs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tabs are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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 M Large and Eaton Vance

The main advantage of trading using opposite M Large and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large 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 M Large Cap and Eaton Vance Tabs 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.