Correlation Between Calvert International and Calvert Developed
Can any of the company-specific risk be diversified away by investing in both Calvert International and Calvert Developed 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 International and Calvert Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert International Responsible and Calvert Developed Market, you can compare the effects of market volatilities on Calvert International and Calvert Developed 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 International with a short position of Calvert Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert International and Calvert Developed.
Diversification Opportunities for Calvert International and Calvert Developed
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Calvert and Calvert is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Calvert International Responsi and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market and Calvert International 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 International Responsible are associated (or correlated) with Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Calvert International i.e., Calvert International and Calvert Developed go up and down completely randomly.
Pair Corralation between Calvert International and Calvert Developed
Assuming the 90 days horizon Calvert International Responsible is expected to generate 0.99 times more return on investment than Calvert Developed. However, Calvert International Responsible is 1.01 times less risky than Calvert Developed. It trades about -0.16 of its potential returns per unit of risk. Calvert Developed Market is currently generating about -0.16 per unit of risk. If you would invest 3,156 in Calvert International Responsible on August 29, 2024 and sell it today you would lose (81.00) from holding Calvert International Responsible or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert International Responsi vs. Calvert Developed Market
Performance |
| Timeline |
| Calvert International |
| Calvert Developed Market |
Calvert International and Calvert Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert International and Calvert Developed
The main advantage of trading using opposite Calvert International and Calvert Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert International position performs unexpectedly, Calvert Developed 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 Developed will offset losses from the drop in Calvert Developed's long position.The idea behind Calvert International Responsible and Calvert Developed Market 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.
| Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Developed Market | Calvert Developed vs. Calvert Mid Cap | Calvert Developed vs. Calvert Large Cap |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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