Correlation Between Calvert Small/mid-cap and Pace Smallmedium
Can any of the company-specific risk be diversified away by investing in both Calvert Small/mid-cap and Pace Smallmedium 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 Pace Smallmedium 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 Pace Smallmedium Value, you can compare the effects of market volatilities on Calvert Small/mid-cap and Pace Smallmedium 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 Pace Smallmedium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Small/mid-cap and Pace Smallmedium.
Diversification Opportunities for Calvert Small/mid-cap and Pace Smallmedium
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Calvert and Pace is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Smallmid Cap A and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value 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 Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of Calvert Small/mid-cap i.e., Calvert Small/mid-cap and Pace Smallmedium go up and down completely randomly.
Pair Corralation between Calvert Small/mid-cap and Pace Smallmedium
Assuming the 90 days horizon Calvert Smallmid Cap A is expected to generate 0.94 times more return on investment than Pace Smallmedium. However, Calvert Smallmid Cap A is 1.06 times less risky than Pace Smallmedium. It trades about 0.34 of its potential returns per unit of risk. Pace Smallmedium Value is currently generating about 0.28 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. Pace Smallmedium Value
Performance |
| Timeline |
| Calvert Small/mid-cap |
| Pace Smallmedium Value |
Calvert Small/mid-cap and Pace Smallmedium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Small/mid-cap and Pace Smallmedium
The main advantage of trading using opposite Calvert Small/mid-cap and Pace Smallmedium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Small/mid-cap position performs unexpectedly, Pace Smallmedium 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 Pace Smallmedium will offset losses from the drop in Pace Smallmedium's long position.The idea behind Calvert Smallmid Cap A and Pace Smallmedium Value 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.
| Pace Smallmedium vs. Aig Government Money | Pace Smallmedium vs. Lord Abbett Government | Pace Smallmedium vs. Dunham Porategovernment Bond | Pace Smallmedium vs. Us Government Securities |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |