Correlation Between Calvert Conservative and Western Asset
Can any of the company-specific risk be diversified away by investing in both Calvert Conservative and Western Asset 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 Western Asset 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 Western Asset California, you can compare the effects of market volatilities on Calvert Conservative and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and Western Asset.
Diversification Opportunities for Calvert Conservative and Western Asset
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calvert and Western is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and Western Asset California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset California 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset California has no effect on the direction of Calvert Conservative i.e., Calvert Conservative and Western Asset go up and down completely randomly.
Pair Corralation between Calvert Conservative and Western Asset
Assuming the 90 days horizon Calvert Conservative Allocation is expected to generate 1.76 times more return on investment than Western Asset. However, Calvert Conservative is 1.76 times more volatile than Western Asset California. It trades about 0.11 of its potential returns per unit of risk. Western Asset California is currently generating about 0.09 per unit of risk. If you would invest 1,595 in Calvert Conservative Allocation on August 30, 2024 and sell it today you would earn a total of 239.00 from holding Calvert Conservative Allocation or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Conservative Allocatio vs. Western Asset California
Performance |
| Timeline |
| Calvert Conservative |
| Western Asset California |
Calvert Conservative and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Conservative and Western Asset
The main advantage of trading using opposite Calvert Conservative and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Calvert Conservative Allocation and Western Asset California 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.
| Western Asset vs. Pgim Conservative Retirement | Western Asset vs. Massmutual Premier Diversified | Western Asset vs. Calvert Conservative Allocation | Western Asset vs. Lord Abbett Diversified |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |