Correlation Between Calvert Emerging and Calvert Developed
Can any of the company-specific risk be diversified away by investing in both Calvert Emerging and Calvert Developed 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 Calvert Developed 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 Calvert Developed Market, you can compare the effects of market volatilities on Calvert Emerging and Calvert Developed 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 Calvert Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Emerging and Calvert Developed.
Diversification Opportunities for Calvert Emerging and Calvert Developed
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Calvert and Calvert is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Emerging Markets and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market 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 Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Calvert Emerging i.e., Calvert Emerging and Calvert Developed go up and down completely randomly.
Pair Corralation between Calvert Emerging and Calvert Developed
Assuming the 90 days horizon Calvert Emerging Markets is expected to under-perform the Calvert Developed. In addition to that, Calvert Emerging is 1.28 times more volatile than Calvert Developed Market. It trades about -0.24 of its total potential returns per unit of risk. Calvert Developed Market is currently generating about -0.16 per unit of volatility. If you would invest 3,112 in Calvert Developed Market on August 29, 2024 and sell it today you would lose (81.00) from holding Calvert Developed Market or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calvert Emerging Markets vs. Calvert Developed Market
Performance |
| Timeline |
| Calvert Emerging Markets |
| Calvert Developed Market |
Calvert Emerging and Calvert Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calvert Emerging and Calvert Developed
The main advantage of trading using opposite Calvert Emerging and Calvert Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Emerging position performs unexpectedly, Calvert Developed 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 Developed will offset losses from the drop in Calvert Developed's long position.| Calvert Emerging vs. Calvert Small Cap | Calvert Emerging vs. Calvert Equity Portfolio | Calvert Emerging vs. Calvert International Opportunities | Calvert Emerging vs. Calvert Short Duration |
| Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Developed Market | Calvert Developed vs. Calvert Mid Cap | Calvert Developed vs. Calvert Large Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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