Correlation Between Dow Jones and Calvert Moderate
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Calvert Moderate 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 Dow Jones and Calvert Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Calvert Moderate Allocation, you can compare the effects of market volatilities on Dow Jones and Calvert Moderate 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 Dow Jones with a short position of Calvert Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Calvert Moderate.
Diversification Opportunities for Dow Jones and Calvert Moderate
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Calvert is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Calvert Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Moderate All and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Calvert Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Moderate All has no effect on the direction of Dow Jones i.e., Dow Jones and Calvert Moderate go up and down completely randomly.
Pair Corralation between Dow Jones and Calvert Moderate
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.2 times more return on investment than Calvert Moderate. However, Dow Jones is 1.2 times more volatile than Calvert Moderate Allocation. It trades about 0.12 of its potential returns per unit of risk. Calvert Moderate Allocation is currently generating about 0.08 per unit of risk. If you would invest 3,624,550 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 805,101 from holding Dow Jones Industrial or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Calvert Moderate Allocation
Performance |
| Timeline |
Dow Jones and Calvert Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Calvert Moderate Allocation
Pair trading matchups for Calvert Moderate
Pair Trading with Dow Jones and Calvert Moderate
The main advantage of trading using opposite Dow Jones and Calvert Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Calvert Moderate 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 Moderate will offset losses from the drop in Calvert Moderate's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Calvert Moderate vs. Calvert Developed Market | Calvert Moderate vs. Calvert Developed Market | Calvert Moderate vs. Calvert Short Duration | Calvert Moderate vs. Calvert International Responsible |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |