Correlation Between Eaton Vance and Emerging Markets

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

By analyzing existing cross correlation between Eaton Vance Tax and Emerging Markets Fund, you can compare the effects of market volatilities on Eaton Vance and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Emerging Markets.

Diversification Opportunities for Eaton Vance and Emerging Markets

0.71

Correlation Coefficient

Eaton Vance  Emerging Markets

Poor diversification

The 3 months correlation between Eaton and Emerging is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Tax are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Eaton Vance i.e., Eaton Vance and Emerging Markets go up and down completely randomly.

Pair Corralation between Eaton Vance and Emerging Markets

Considering the 90-day investment horizon Eaton Vance is expected to generate 1.4 times less return on investment than Emerging Markets. In addition to that, Eaton Vance is 1.02 times more volatile than Emerging Markets Fund. It trades about 0.04 of its total potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.06 per unit of volatility. If you would invest  934.00  in Emerging Markets Fund on June 22, 2024 and sell it today you would earn a total of  300.00  from holding Emerging Markets Fund or generate 32.12% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Emerging Markets Fund

Eaton Vance Tax

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eaton Vance and Emerging Markets

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

The idea behind Eaton Vance Tax and Emerging Markets Fund 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.