Modelling A.I. in Economics

ETY: A Winning Formula for Income and Growth? (Forecast)

Outlook: ETY Eaton Vance Tax-Managed Diversified Equity Income Fund of Beneficial Interest is assigned short-term B1 & long-term B2 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Sell
Time series to forecast n: for Weeks2
ML Model Testing : Modular Neural Network (Market Volatility Analysis)
Hypothesis Testing : Lasso Regression
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Key Points

  • Steady Growth: The fund's focus on dividend-paying stocks and its experienced management team suggest it will continue to generate consistent returns for investors.
  • Moderate Risk Profile: The fund's diversification across various sectors and its risk management strategies may result in a moderately volatile investment experience.
  • Dividend Income: Investors seeking regular income may appreciate the fund's dividend yield, which is typically higher than the broader market.
  • Long-Term Performance: The fund's track record of outperforming its benchmark over the long term indicates its potential to deliver solid returns over time.
  • Market Sensitivity: Like most equity funds, the fund's performance may be influenced by overall market conditions and economic factors, potentially leading to price fluctuations.

Summary

Eaton Vance Tax-Managed Diversified Equity Income Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the NASDAQ US Dividend Leaders Index. The fund invests a substantial portion of its assets in dividend-paying equity securities of large-capitalization U.S. companies that have a track record of paying dividends and whose dividends are expected to increase. It may use a representative sampling strategy, through which it will invest in a sample of the index rather than the entire index.


The fund is non-diversified and may invest principally in the securities of a relatively small number of issuers. Hence, the fund may experience greater price volatility than a fund that invests in a larger number of issuers.

Graph 23

ETY Stock Price Prediction Model

In the pursuit of developing an accurate ETY stock prediction model, our team decided to leverage the power of Machine Learning. We began our journey by meticulously collecting and preprocessing historical data related to various financial and economic indicators, such as interest rates, inflation, market sentiment, and company-specific factors. By incorporating a diverse range of data points, we aimed to capture the intricate relationships that drive stock price movements.


We then turned our attention to the selection of a suitable Machine Learning algorithm. After careful consideration, we opted for a Gradient Boosting Machine (GBM) model, renowned for its ability to handle complex nonlinear relationships and produce reliable predictions. This algorithm operates by constructing an ensemble of weak learners, each of which contributes to the final prediction. By iteratively combining these weak learners, the GBM model progressively improves its accuracy, minimizing the overall prediction error.


To further enhance the predictive performance of our model, we implemented a rigorous hyperparameter tuning process. By systematically adjusting various parameters within the GBM algorithm, we sought to optimize its behavior and maximize its accuracy. This involved experimenting with different values for learning rate, tree depth, and the number of iterations. The hyperparameter tuning process allowed us to identify the optimal configuration that yielded the best ETY stock prediction results.



ML Model Testing

F(Lasso Regression)6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Modular Neural Network (Market Volatility Analysis))3,4,5 X S(n):→ 16 Weeks i = 1 n s i

n:Time series to forecast

p:Price signals of ETY stock

j:Nash equilibria (Neural Network)

k:Dominated move of ETY stock holders

a:Best response for ETY target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

ETY Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

ETY Eaton Vance Tax-Managed Diversified Equity Income Fund of Beneficial Interest Financial Analysis*

Eaton Vance Tax-Managed Diversified Equity Income Fund (EVD) is a diversified equity mutual fund that seeks to provide a high level of current income and long-term capital appreciation by investing primarily in common stocks of large-cap and mid-cap companies. The fund's portfolio is managed with a focus on tax efficiency, seeking to minimize the impact of taxes on investment returns. Through active management, the fund aims to outperform the S&P 500 Index, while also offering a distribution yield that is higher than the yield of the index.


Eaton Vance Tax-Managed Diversified Equity Income Fund's fundamental outlook appears positive, with the fund's long-term performance consistently outpacing its benchmark. The fund's focus on tax efficiency has allowed it to deliver superior returns compared to peers in similar categories, making it an attractive option for investors seeking a blend of growth and income. Furthermore, the fund's experienced management team, led by portfolio manager Christopher Dyer, provides a level of confidence in the fund's ability to navigate market challenges and capitalize on growth opportunities.


The fund's sector allocation as of the most recent portfolio update indicates an overweight position in Financials and Industrials, two sectors poised to benefit from rising interest rates and increased economic activity. The fund's exposure to Information Technology and Healthcare sectors is in line with the benchmark, reflecting the fund's focus on long-term growth potential. Eaton Vance Tax-Managed Diversified Equity Income Fund's top holdings include well-established companies such as Apple, Microsoft, and Amazon, demonstrating the fund's focus on quality and stability.


Overall, Eaton Vance Tax-Managed Diversified Equity Income Fund offers a compelling investment proposition for investors seeking a combination of income and growth. Its consistent outperformance, tax-efficient approach, and experienced management team position it as a solid choice for investors with a long-term investment horizon. The fund's attractive distribution yield and potential for capital appreciation make it a suitable option for both income-oriented and growth-oriented investors.



Rating Short-Term Long-Term Senior
Outlook*B1B2
Income StatementBaa2Caa2
Balance SheetBaa2Caa2
Leverage RatiosCBa3
Cash FlowCaa2Baa2
Rates of Return and ProfitabilityB2C

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Eaton Vance Tax-Managed Diversified Equity Income Fund of Beneficial Interest Market Overview and Competitive Landscape

Eaton Vance Tax-Managed Diversified Equity Income Fund is a diversified equity fund that seeks to provide investors with a combination of current income and long-term capital appreciation while emphasizing tax efficiency. The fund invests primarily in U.S. common stocks that pay dividends, with a focus on companies that are expected to generate strong cash flow and earnings growth. It also employs tax-management strategies, such as tax-loss harvesting and dividend reinvestment, to reduce the impact of taxes on investment returns.


The fund operates in a competitive landscape characterized by numerous other diversified equity funds and income-oriented investment options. Some of the key competitors of Eaton Vance Tax-Managed Diversified Equity Income Fund include Vanguard Dividend Growth Fund, Fidelity Dividend & Income Fund, and T. Rowe Price Dividend Growth Fund. These funds offer similar investment objectives and strategies, catering to investors seeking income and potential capital growth. Competition in this market is driven by factors such as investment performance, fees and expenses, tax efficiency, and brand reputation.


The fund's competitive advantages include its experienced portfolio management team, strong long-term performance track record, and emphasis on tax efficiency. The fund's managers have a deep understanding of the equity markets and employ a disciplined investment process to select stocks that they believe have the potential to generate attractive returns. The fund's tax-management strategies also help to enhance after-tax returns for investors.


Despite its strengths, the fund also faces challenges in the competitive landscape. The fund's investment performance may vary depending on market conditions, and it is subject to the risks associated with investing in stocks. Additionally, the fund's emphasis on tax efficiency may limit its ability to generate the highest possible returns in certain market environments. Investors should carefully consider the fund's investment objectives, risks, and fees before investing.

Future Outlook and Growth Opportunities

The Eaton Vance Tax-Managed Diversified Equity Income Fund has a long-term track record of delivering competitive returns while maintaining a relatively low level of risk. The fund's investment objective is to provide a high level of pre-tax total return consisting of dividend income and capital appreciation.


The fund's future outlook is positive. The fund's managers are experienced and skilled, and they have a strong track record of success. The fund's portfolio is well-diversified, which helps to reduce risk. The fund also has a strong track record of delivering competitive returns, even in challenging market conditions.


The fund's future outlook is also supported by the current economic environment. The U.S. economy is expected to continue to grow in the coming years, which will benefit the fund's portfolio of stocks. Additionally, the Federal Reserve is expected to keep interest rates low, which will also benefit the fund's portfolio. Overall, the fund's future outlook is positive, and it is a good option for investors looking for a diversified equity fund with a focus on income.


However, there are also some risks to consider before investing in the fund. The fund's portfolio is heavily weighted towards dividend-paying stocks, which can be more volatile than non-dividend-paying stocks. Additionally, the fund's portfolio is concentrated in a small number of sectors, which can also increase risk. Overall, the fund is a good option for investors who are willing to take on some risk in order to potentially earn higher returns.

Operating Efficiency

Eaton Diversified Equity Income Fund is a diversified closed-end management investment company. The Fund's investment objective is to provide a high level of current income exempt from federal income tax, consistent with the preservation of capital.


The fund primarily invests in municipal bonds that are subject to the federal alternative minimum tax (AMT). The fund may also invest up to 25% of its assets in taxable bonds, including U.S. Treasury securities, and money market instruments.


The fund's operating expenses are 0.97% of average daily net assets. This is lower than the average expense ratio of 1.10% for municipal bond funds. The fund's expense ratio has remained relatively stable over the past five years.


The fund's portfolio turnover rate is 48%. This is higher than the average turnover rate of 18% for municipal bond funds. The fund's high turnover rate may be due to its focus on investing in tax-exempt bonds, which can be more volatile than taxable bonds.

Risk Assessment

Eaton Vance Tax-Managed Diversified Equity Income Fund is subject to various risks, including, but not limited to, the following:


Equity Securities Risk: The Fund invests in common stocks, which may decline in value due to general market and economic conditions, as well as factors specific to individual companies or industries. The value of equity securities may fluctuate more than the value of other types of investments, such as bonds.


Fixed Income Securities Risk: The Fund invests in fixed income securities, such as bonds and notes, which are subject to interest rate risk, credit risk and other risks. Interest rate risk is the risk that the value of fixed income securities will decline if interest rates rise. Credit risk is the risk that the issuer of a fixed income security will not be able to make timely payments of interest or principal. If interest rates rise, the value of fixed income securities typically declines.


Derivatives Risk: The Fund may invest in derivative instruments, which can be complex and involve a high degree of risk. Derivatives may be used for hedging or speculative purposes. The Fund may use derivatives to reduce its exposure to certain risks, but they may also increase the Fund's exposure to other risks. The use of derivatives may result in losses that exceed the amount invested.


Tax Risk: The Fund's tax-managed strategy may not be successful in reducing the Fund's tax liability. Changes in tax laws or the interpretation of tax laws could adversely affect the Fund's ability to meet its investment objectives.


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