Correlation Between American Funds and Calvert Moderate
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Calvert Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Calvert Moderate Allocation, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Calvert Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Calvert Moderate.
Diversification Opportunities for American Funds and Calvert Moderate
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Calvert is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American 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 American Funds 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 American Funds American 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 American Funds i.e., American Funds and Calvert Moderate go up and down completely randomly.
Pair Corralation between American Funds and Calvert Moderate
Assuming the 90 days horizon American Funds is expected to generate 1.68 times less return on investment than Calvert Moderate. In addition to that, American Funds is 1.17 times more volatile than Calvert Moderate Allocation. It trades about 0.12 of its total potential returns per unit of risk. Calvert Moderate Allocation is currently generating about 0.23 per unit of volatility. If you would invest 2,234 in Calvert Moderate Allocation on August 31, 2024 and sell it today you would earn a total of 54.00 from holding Calvert Moderate Allocation or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Funds American vs. Calvert Moderate Allocation
Performance |
| Timeline |
| American Funds American |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Calvert Moderate All |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
American Funds and Calvert Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Calvert Moderate
The main advantage of trading using opposite American Funds and Calvert Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Mesirow Financial Small | American Funds vs. Davis Financial Fund | American Funds vs. Royce Global Financial | American Funds vs. Mesirow Financial Small |
| Calvert Moderate vs. Fidelity Advisor Financial | Calvert Moderate vs. Transamerica Financial Life | Calvert Moderate vs. Mesirow Financial Small | Calvert Moderate vs. Prudential Jennison Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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