Correlation Between Calvert Emerging and American Funds
Can any of the company-specific risk be diversified away by investing in both Calvert Emerging and American Funds 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 Emerging and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Emerging Markets and American Funds New, you can compare the effects of market volatilities on Calvert Emerging and American Funds 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 Emerging with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Emerging and American Funds.
Diversification Opportunities for Calvert Emerging and American Funds
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Calvert and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Emerging Markets and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New and Calvert Emerging 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 Emerging Markets are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Calvert Emerging i.e., Calvert Emerging and American Funds go up and down completely randomly.
Pair Corralation between Calvert Emerging and American Funds
Assuming the 90 days horizon Calvert Emerging Markets is expected to under-perform the American Funds. In addition to that, Calvert Emerging is 1.41 times more volatile than American Funds New. It trades about -0.18 of its total potential returns per unit of risk. American Funds New is currently generating about 0.09 per unit of volatility. If you would invest 8,177 in American Funds New on September 13, 2024 and sell it today you would earn a total of 75.00 from holding American Funds New or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Emerging Markets vs. American Funds New
Performance |
| Timeline |
| Calvert Emerging Markets |
| American Funds New |
Calvert Emerging and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Emerging and American Funds
The main advantage of trading using opposite Calvert Emerging and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Emerging position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Calvert Emerging vs. Barings Active Short | Calvert Emerging vs. Quantitative Longshort Equity | Calvert Emerging vs. Delaware Investments Ultrashort | Calvert Emerging vs. Easterly Snow Longshort |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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