Correlation Between Eaton Vance and Matthews India

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

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

Diversification Opportunities for Eaton Vance and Matthews India

0.91

Correlation Coefficient

Eaton Vance  Matthews India

Almost no diversification

The 3 months correlation between Eaton and Matthews is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Greater and Matthews India Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews India 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 Greater are associated (or correlated) with Matthews India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews India has no effect on the direction of Eaton Vance i.e., Eaton Vance and Matthews India go up and down completely randomly.

Pair Corralation between Eaton Vance and Matthews India

Assuming the 90 days horizon Eaton Vance Greater is expected to generate 0.86 times more return on investment than Matthews India. However, Eaton Vance Greater is 1.17 times less risky than Matthews India. It trades about -0.08 of its potential returns per unit of risk. Matthews India Fund is currently generating about -0.07 per unit of risk. If you would invest  4,515  in Eaton Vance Greater on August 17, 2024 and sell it today you would lose (186.00) from holding Eaton Vance Greater or give up 4.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Eaton Vance Greater  vs.  Matthews India Fund

Eaton Vance Greater

Risk-Adjusted Performance

0 of 100

Very Weak

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

Matthews India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews India Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Matthews India 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 Matthews India

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

The idea behind Eaton Vance Greater and Matthews India 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.