Correlation Between Calvert Small/mid-cap and Guidemark(r) Small/mid
Can any of the company-specific risk be diversified away by investing in both Calvert Small/mid-cap and Guidemark(r) Small/mid 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 Small/mid-cap and Guidemark(r) Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Smallmid Cap A and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Calvert Small/mid-cap and Guidemark(r) Small/mid 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 Small/mid-cap with a short position of Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Small/mid-cap and Guidemark(r) Small/mid.
Diversification Opportunities for Calvert Small/mid-cap and Guidemark(r) Small/mid
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Calvert and Guidemark(r) is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Smallmid Cap A and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Calvert Small/mid-cap 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 Smallmid Cap A are associated (or correlated) with Guidemark(r) Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Calvert Small/mid-cap i.e., Calvert Small/mid-cap and Guidemark(r) Small/mid go up and down completely randomly.
Pair Corralation between Calvert Small/mid-cap and Guidemark(r) Small/mid
Assuming the 90 days horizon Calvert Smallmid Cap A is expected to generate 0.85 times more return on investment than Guidemark(r) Small/mid. However, Calvert Smallmid Cap A is 1.17 times less risky than Guidemark(r) Small/mid. It trades about 0.34 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.26 per unit of risk. If you would invest 2,716 in Calvert Smallmid Cap A on August 27, 2024 and sell it today you would earn a total of 242.00 from holding Calvert Smallmid Cap A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Smallmid Cap A vs. Guidemark Smallmid Cap
Performance |
| Timeline |
| Calvert Small/mid-cap |
| Guidemark Smallmid Cap |
Calvert Small/mid-cap and Guidemark(r) Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Small/mid-cap and Guidemark(r) Small/mid
The main advantage of trading using opposite Calvert Small/mid-cap and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Small/mid-cap position performs unexpectedly, Guidemark(r) Small/mid 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 Guidemark(r) Small/mid will offset losses from the drop in Guidemark(r) Small/mid's long position.The idea behind Calvert Smallmid Cap A and Guidemark Smallmid Cap 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.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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