Correlation Between Calvert Conservative and American Funds
Can any of the company-specific risk be diversified away by investing in both Calvert Conservative and American Funds 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 Calvert Conservative and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Conservative Allocation and American Funds 2040, you can compare the effects of market volatilities on Calvert Conservative and American Funds 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 Calvert Conservative with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and American Funds.
Diversification Opportunities for Calvert Conservative and American Funds
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Calvert and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Calvert Conservative 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 Calvert Conservative Allocation are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Calvert Conservative i.e., Calvert Conservative and American Funds go up and down completely randomly.
Pair Corralation between Calvert Conservative and American Funds
Assuming the 90 days horizon Calvert Conservative Allocation is expected to generate 0.48 times more return on investment than American Funds. However, Calvert Conservative Allocation is 2.07 times less risky than American Funds. It trades about 0.07 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.0 per unit of risk. If you would invest 1,782 in Calvert Conservative Allocation on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Calvert Conservative Allocation or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Conservative Allocatio vs. American Funds 2040
Performance |
| Timeline |
| Calvert Conservative |
| American Funds 2040 |
Calvert Conservative and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Conservative and American Funds
The main advantage of trading using opposite Calvert Conservative and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Calvert Conservative vs. John Hancock Money | Calvert Conservative vs. Aig Government Money | Calvert Conservative vs. Ashmore Emerging Markets | Calvert Conservative vs. Hsbc Treasury Money |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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