Correlation Between Eaton Vance and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Federated Premier 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 Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Municipal and Federated Premier Municipal, you can compare the effects of market volatilities on Eaton Vance and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Federated Premier.
Diversification Opportunities for Eaton Vance and Federated Premier
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eaton and Federated is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Municipal and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Municipal are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Eaton Vance i.e., Eaton Vance and Federated Premier go up and down completely randomly.
Pair Corralation between Eaton Vance and Federated Premier
Considering the 90-day investment horizon Eaton Vance is expected to generate 1.46 times less return on investment than Federated Premier. In addition to that, Eaton Vance is 1.33 times more volatile than Federated Premier Municipal. It trades about 0.06 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.11 per unit of volatility. If you would invest 1,130 in Federated Premier Municipal on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Federated Premier Municipal or generate 1.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Eaton Vance Municipal vs. Federated Premier Municipal
Performance |
Timeline |
Eaton Vance Municipal |
Federated Premier |
Eaton Vance and Federated Premier Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eaton Vance and Federated Premier
The main advantage of trading using opposite Eaton Vance and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.Eaton Vance vs. Munivest Fund | Eaton Vance vs. Blackrock Muniyield Quality | Eaton Vance vs. Blackrock Muniyield Quality | Eaton Vance vs. Blackrock Muniholdings Closed |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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