Correlation Between California High-yield and Calvert Equity
Can any of the company-specific risk be diversified away by investing in both California High-yield and Calvert Equity 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 California High-yield and Calvert Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Calvert Equity Portfolio, you can compare the effects of market volatilities on California High-yield and Calvert Equity 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 California High-yield with a short position of Calvert Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Calvert Equity.
Diversification Opportunities for California High-yield and Calvert Equity
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between California and Calvert is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Calvert Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity Portfolio and California High-yield 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 California High Yield Municipal are associated (or correlated) with Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity Portfolio has no effect on the direction of California High-yield i.e., California High-yield and Calvert Equity go up and down completely randomly.
Pair Corralation between California High-yield and Calvert Equity
Assuming the 90 days horizon California High-yield is expected to generate 2.75 times less return on investment than Calvert Equity. But when comparing it to its historical volatility, California High Yield Municipal is 1.67 times less risky than Calvert Equity. It trades about 0.19 of its potential returns per unit of risk. Calvert Equity Portfolio is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,890 in Calvert Equity Portfolio on September 2, 2024 and sell it today you would earn a total of 143.00 from holding Calvert Equity Portfolio or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Calvert Equity Portfolio
Performance |
| Timeline |
| California High Yield |
| Calvert Equity Portfolio |
California High-yield and Calvert Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Calvert Equity
The main advantage of trading using opposite California High-yield and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Calvert Equity 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 Calvert Equity will offset losses from the drop in Calvert Equity's long position.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Calvert Equity vs. Artisan High Income | Calvert Equity vs. Legg Mason Partners | Calvert Equity vs. California High Yield Municipal | Calvert Equity vs. Federated Institutional High |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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