Correlation Between Calvert Developed and Westwood Quality
Can any of the company-specific risk be diversified away by investing in both Calvert Developed and Westwood Quality 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 Developed and Westwood Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Developed Market and Westwood Quality Smidcap, you can compare the effects of market volatilities on Calvert Developed and Westwood Quality 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 Developed with a short position of Westwood Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Developed and Westwood Quality.
Diversification Opportunities for Calvert Developed and Westwood Quality
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Calvert and Westwood is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Westwood Quality Smidcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Quality Smidcap and Calvert Developed 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 Developed Market are associated (or correlated) with Westwood Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Quality Smidcap has no effect on the direction of Calvert Developed i.e., Calvert Developed and Westwood Quality go up and down completely randomly.
Pair Corralation between Calvert Developed and Westwood Quality
Assuming the 90 days horizon Calvert Developed is expected to generate 1.3 times less return on investment than Westwood Quality. But when comparing it to its historical volatility, Calvert Developed Market is 1.3 times less risky than Westwood Quality. It trades about 0.06 of its potential returns per unit of risk. Westwood Quality Smidcap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,281 in Westwood Quality Smidcap on September 2, 2024 and sell it today you would earn a total of 466.00 from holding Westwood Quality Smidcap or generate 36.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Developed Market vs. Westwood Quality Smidcap
Performance |
| Timeline |
| Calvert Developed Market |
| Westwood Quality Smidcap |
Calvert Developed and Westwood Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Developed and Westwood Quality
The main advantage of trading using opposite Calvert Developed and Westwood Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Developed position performs unexpectedly, Westwood Quality 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 Westwood Quality will offset losses from the drop in Westwood Quality's long position.| Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Mid Cap | Calvert Developed vs. Calvert Short Duration |
| Westwood Quality vs. Westwood Smidcap Fund | Westwood Quality vs. Westwood Income Opportunity | Westwood Quality vs. Westwood Largecap Value | Westwood Quality vs. Invesco DWA Healthcare |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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