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 Municipal, 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

0.38

Correlation Coefficient

M Large  Eaton Vance

Weak diversification

The 3 months correlation between MTCGX and Eaton is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Eaton Vance Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Municipal 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 Municipal 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 generate 6.4 times more return on investment than Eaton Vance. However, M Large is 6.4 times more volatile than Eaton Vance Municipal. It trades about 0.03 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about 0.06 per unit of risk. If you would invest  3,212  in M Large Cap on October 12, 2024 and sell it today you would earn a total of  164.00  from holding M Large Cap or generate 5.11% return on investment over 90 days.

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

M Large Cap  vs.  Eaton Vance Municipal

M Large Cap

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Eaton Vance Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Municipal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.