Correlation Between Eaton Vance and Invesco Municipal

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

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

Diversification Opportunities for Eaton Vance and Invesco Municipal

0.8

Correlation Coefficient

Eaton Vance  Invesco Municipal

Very poor diversification

The 3 months correlation between Eaton and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance National and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Eaton Vance 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 Eaton Vance National are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of Eaton Vance i.e., Eaton Vance and Invesco Municipal go up and down completely randomly.

Pair Corralation between Eaton Vance and Invesco Municipal

Considering the 90-day investment horizon Eaton Vance National is expected to under-perform the Invesco Municipal. But the stock apears to be less risky and, when comparing its historical volatility, Eaton Vance National is 1.2 times less risky than Invesco Municipal. The stock trades about -0.08 of its potential returns per unit of risk. The Invesco Municipal Income is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  577.00  in Invesco Municipal Income on May 6, 2025 and sell it today you would lose (14.00) from holding Invesco Municipal Income or give up 2.43% of portfolio value over 90 days.

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

Eaton Vance National  vs.  Invesco Municipal Income

Eaton Vance National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Invesco Municipal Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Municipal Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Invesco Municipal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Invesco Municipal

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

The idea behind Eaton Vance National and Invesco Municipal Income 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.