Correlation Between Dreyfus Strategic and Eaton Vance

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

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

Diversification Opportunities for Dreyfus Strategic and Eaton Vance

-0.2

Correlation Coefficient

Dreyfus Strategic  Eaton Vance

Good diversification

The 3 months correlation between Dreyfus and Eaton is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Strategic Municipal and Eaton Vance Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Val and Dreyfus Strategic 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 Dreyfus Strategic Municipal 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 Val has no effect on the direction of Dreyfus Strategic i.e., Dreyfus Strategic and Eaton Vance go up and down completely randomly.

Pair Corralation between Dreyfus Strategic and Eaton Vance

Assuming the 90 days horizon Dreyfus Strategic Municipal is expected to under-perform the Eaton Vance. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus Strategic Municipal is 1.66 times less risky than Eaton Vance. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Eaton Vance Val is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,851  in Eaton Vance Val on January 26, 2024 and sell it today you would earn a total of  155.00  from holding Eaton Vance Val or generate 8.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Dreyfus Strategic Municipal  vs.  Eaton Vance Val

Dreyfus Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eaton Vance Val

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Val are ranked lower than 14 (%) 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 May 2024.

Pair Trading with Dreyfus Strategic and Eaton Vance

The main advantage of trading using opposite Dreyfus Strategic and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Strategic 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 Dreyfus Strategic Municipal and Eaton Vance Val 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.