Correlation Between Calvert Moderate and California Tax-free
Can any of the company-specific risk be diversified away by investing in both Calvert Moderate and California Tax-free 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 California Tax-free 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 California Tax Free Fund, you can compare the effects of market volatilities on Calvert Moderate and California Tax-free 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 California Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and California Tax-free.
Diversification Opportunities for Calvert Moderate and California Tax-free
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Calvert and CALIFORNIA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation and California Tax Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Tax Free 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 California Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Tax Free has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and California Tax-free go up and down completely randomly.
Pair Corralation between Calvert Moderate and California Tax-free
Assuming the 90 days horizon Calvert Moderate Allocation is expected to generate 2.42 times more return on investment than California Tax-free. However, Calvert Moderate is 2.42 times more volatile than California Tax Free Fund. It trades about 0.1 of its potential returns per unit of risk. California Tax Free Fund is currently generating about 0.07 per unit of risk. If you would invest 1,936 in Calvert Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 187.00 from holding Calvert Moderate Allocation or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Calvert Moderate Allocation vs. California Tax Free Fund
Performance |
| Timeline |
| Calvert Moderate All |
| California Tax Free |
Calvert Moderate and California Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Moderate and California Tax-free
The main advantage of trading using opposite Calvert Moderate and California Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate position performs unexpectedly, California Tax-free 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 California Tax-free will offset losses from the drop in California Tax-free's long position.| Calvert Moderate vs. Ab Bond Inflation | Calvert Moderate vs. T Rowe Price | Calvert Moderate vs. Bbh Intermediate Municipal | Calvert Moderate vs. Blrc Sgy Mnp |
| California Tax-free vs. Transamerica Intermediate Muni | California Tax-free vs. Versatile Bond Portfolio | California Tax-free vs. Bbh Intermediate Municipal | California Tax-free vs. T Rowe Price |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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