Correlation Between American Funds and Calvert Conservative
Can any of the company-specific risk be diversified away by investing in both American Funds and Calvert Conservative 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 Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Conservative and Calvert Conservative Allocation, you can compare the effects of market volatilities on American Funds and Calvert Conservative 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 Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Calvert Conservative.
Diversification Opportunities for American Funds and Calvert Conservative
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Calvert is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Conservative and Calvert Conservative Allocatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Conservative 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 Conservative are associated (or correlated) with Calvert Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Conservative has no effect on the direction of American Funds i.e., American Funds and Calvert Conservative go up and down completely randomly.
Pair Corralation between American Funds and Calvert Conservative
Assuming the 90 days horizon American Funds is expected to generate 1.95 times less return on investment than Calvert Conservative. In addition to that, American Funds is 1.14 times more volatile than Calvert Conservative Allocation. It trades about 0.03 of its total potential returns per unit of risk. Calvert Conservative Allocation is currently generating about 0.07 per unit of volatility. If you would invest 1,810 in Calvert Conservative Allocation on August 27, 2024 and sell it today you would earn a total of 8.00 from holding Calvert Conservative Allocation or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Conservative vs. Calvert Conservative Allocatio
Performance |
| Timeline |
| American Funds Conse |
| Calvert Conservative |
American Funds and Calvert Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Calvert Conservative
The main advantage of trading using opposite American Funds and Calvert Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Calvert Conservative 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 Conservative will offset losses from the drop in Calvert Conservative's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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