Correlation Between Calvert Bond and Calvert Equity
Can any of the company-specific risk be diversified away by investing in both Calvert Bond and Calvert Equity 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 Bond and Calvert Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Bond Portfolio and Calvert Equity Portfolio, you can compare the effects of market volatilities on Calvert Bond and Calvert Equity 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 Bond with a short position of Calvert Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Bond and Calvert Equity.
Diversification Opportunities for Calvert Bond and Calvert Equity
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Calvert and Calvert is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Bond Portfolio and Calvert Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity Portfolio and Calvert Bond 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 Bond Portfolio are associated (or correlated) with Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity Portfolio has no effect on the direction of Calvert Bond i.e., Calvert Bond and Calvert Equity go up and down completely randomly.
Pair Corralation between Calvert Bond and Calvert Equity
Assuming the 90 days horizon Calvert Bond is expected to generate 1.66 times less return on investment than Calvert Equity. But when comparing it to its historical volatility, Calvert Bond Portfolio is 2.15 times less risky than Calvert Equity. It trades about 0.1 of its potential returns per unit of risk. Calvert Equity Portfolio is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,003 in Calvert Equity Portfolio on August 25, 2024 and sell it today you would earn a total of 529.00 from holding Calvert Equity Portfolio or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Bond Portfolio vs. Calvert Equity Portfolio
Performance |
| Timeline |
| Calvert Bond Portfolio |
| Calvert Equity Portfolio |
Calvert Bond and Calvert Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Bond and Calvert Equity
The main advantage of trading using opposite Calvert Bond and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Bond position performs unexpectedly, Calvert Equity 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 Calvert Equity will offset losses from the drop in Calvert Equity's long position.| Calvert Bond vs. Metropolitan West Total | Calvert Bond vs. Pimco Total Return | Calvert Bond vs. Total Return Fund | Calvert Bond vs. Total Return Fund |
| Calvert Equity vs. Calvert Bond Portfolio | Calvert Equity vs. Calvert International Equity | Calvert Equity vs. Calvert Capital Accumulation | Calvert Equity vs. Calvert Balanced Portfolio |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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