Correlation Between Calvert Moderate and New World
Can any of the company-specific risk be diversified away by investing in both Calvert Moderate and New World 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 Moderate and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Moderate Allocation and New World Fund, you can compare the effects of market volatilities on Calvert Moderate and New World 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 Moderate with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and New World.
Diversification Opportunities for Calvert Moderate and New World
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Calvert and New is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and Calvert Moderate 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 Moderate Allocation are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and New World go up and down completely randomly.
Pair Corralation between Calvert Moderate and New World
Assuming the 90 days horizon Calvert Moderate is expected to generate 1.23 times less return on investment than New World. But when comparing it to its historical volatility, Calvert Moderate Allocation is 1.3 times less risky than New World. It trades about 0.07 of its potential returns per unit of risk. New World Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,464 in New World Fund on September 14, 2024 and sell it today you would earn a total of 1,671 from holding New World Fund or generate 25.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Moderate Allocation vs. New World Fund
Performance |
| Timeline |
| Calvert Moderate All |
| New World Fund |
Calvert Moderate and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Moderate and New World
The main advantage of trading using opposite Calvert Moderate and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Calvert Moderate vs. Oil Gas Ultrasector | Calvert Moderate vs. Firsthand Alternative Energy | Calvert Moderate vs. Hennessy Bp Energy | Calvert Moderate vs. Franklin Natural Resources |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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