Correlation Between Calvert Conservative and Great West
Can any of the company-specific risk be diversified away by investing in both Calvert Conservative and Great West 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 Great West 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 Great West Lifetime 2050, you can compare the effects of market volatilities on Calvert Conservative and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and Great West.
Diversification Opportunities for Calvert Conservative and Great West
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Calvert and Great is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and Great West Lifetime 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Calvert Conservative i.e., Calvert Conservative and Great West go up and down completely randomly.
Pair Corralation between Calvert Conservative and Great West
Assuming the 90 days horizon Calvert Conservative Allocation is expected to generate 0.44 times more return on investment than Great West. However, Calvert Conservative Allocation is 2.27 times less risky than Great West. It trades about -0.38 of its potential returns per unit of risk. Great West Lifetime 2050 is currently generating about -0.32 per unit of risk. If you would invest 1,851 in Calvert Conservative Allocation on October 7, 2024 and sell it today you would lose (69.00) from holding Calvert Conservative Allocation or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Conservative Allocatio vs. Great West Lifetime 2050
Performance |
| Timeline |
| Calvert Conservative |
| Great West Lifetime |
Calvert Conservative and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Conservative and Great West
The main advantage of trading using opposite Calvert Conservative and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.The idea behind Calvert Conservative Allocation and Great West Lifetime 2050 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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