Correlation Between Federal Agricultural and Eaton Vance

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

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

Diversification Opportunities for Federal Agricultural and Eaton Vance

-0.66

Correlation Coefficient

Federal Agricultural  Eaton Vance

Excellent diversification

The 3 months correlation between Federal and Eaton is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage 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 Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and Eaton Vance go up and down completely randomly.

Pair Corralation between Federal Agricultural and Eaton Vance

Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to generate 3.7 times more return on investment than Eaton Vance. However, Federal Agricultural is 3.7 times more volatile than Eaton Vance Municipal. It trades about 0.07 of its potential returns per unit of risk. Eaton Vance Municipal is currently generating about -0.01 per unit of risk. If you would invest  20,534  in Federal Agricultural Mortgage on September 19, 2024 and sell it today you would earn a total of  385.00  from holding Federal Agricultural Mortgage or generate 1.87% return on investment over 90 days.

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

Federal Agricultural Mortgage  vs.  Eaton Vance Municipal

Federal Agricultural

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Agricultural Mortgage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Federal Agricultural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 investors with long positions. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federal Agricultural and Eaton Vance

The main advantage of trading using opposite Federal Agricultural and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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 Federal Agricultural Mortgage 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.