Correlation Between Eaton Vance and Madison Covered

Can any of the company-specific risk be diversified away by investing in both Eaton Vance and Madison Covered 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 Madison Covered 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 Madison Covered Call, you can compare the effects of market volatilities on Eaton Vance and Madison Covered 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 Madison Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Madison Covered.

Diversification Opportunities for Eaton Vance and Madison Covered

-0.38

Correlation Coefficient

Eaton Vance  Madison Covered

Very good diversification

The 3 months correlation between Eaton and Madison is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax and Madison Covered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Covered Call 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 Madison Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Covered Call has no effect on the direction of Eaton Vance i.e., Eaton Vance and Madison Covered go up and down completely randomly.

Pair Corralation between Eaton Vance and Madison Covered

Considering the 90-day investment horizon Eaton Vance Tax is expected to generate 0.69 times more return on investment than Madison Covered. However, Eaton Vance Tax is 1.45 times less risky than Madison Covered. It trades about 0.07 of its potential returns per unit of risk. Madison Covered Call is currently generating about 0.02 per unit of risk. If you would invest  674.00  in Eaton Vance Tax on September 3, 2024 and sell it today you would earn a total of  183.00  from holding Eaton Vance Tax or generate 27.15% return on investment over 90 days.

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

Eaton Vance Tax  vs.  Madison Covered Call

Eaton Vance Tax

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Madison Covered Call

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison Covered Call has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Madison Covered is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and Madison Covered

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

The idea behind Eaton Vance Tax and Madison Covered Call 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.