Correlation Between Calvert Moderate and New Economy
Can any of the company-specific risk be diversified away by investing in both Calvert Moderate and New Economy 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 Economy 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 Economy Fund, you can compare the effects of market volatilities on Calvert Moderate and New Economy 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 Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and New Economy.
Diversification Opportunities for Calvert Moderate and New Economy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calvert and New is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy 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 Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and New Economy go up and down completely randomly.
Pair Corralation between Calvert Moderate and New Economy
Assuming the 90 days horizon Calvert Moderate is expected to generate 1.47 times less return on investment than New Economy. But when comparing it to its historical volatility, Calvert Moderate Allocation is 1.96 times less risky than New Economy. It trades about 0.1 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,738 in New Economy Fund on September 3, 2024 and sell it today you would earn a total of 735.00 from holding New Economy Fund or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Moderate Allocation vs. New Economy Fund
Performance |
| Timeline |
| Calvert Moderate All |
| New Economy Fund |
Calvert Moderate and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Moderate and New Economy
The main advantage of trading using opposite Calvert Moderate and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate position performs unexpectedly, New Economy 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 Economy will offset losses from the drop in New Economy's long position.| Calvert Moderate vs. Us Vector Equity | Calvert Moderate vs. Multimedia Portfolio Multimedia | Calvert Moderate vs. The Fixed Income | Calvert Moderate vs. Ab Select Equity |
| New Economy vs. Barings Active Short | New Economy vs. Sterling Capital Short | New Economy vs. Vanguard Institutional Short Term | New Economy vs. Ab Select Longshort |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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