Correlation Between GM and Calvert Balanced
Can any of the company-specific risk be diversified away by investing in both GM and Calvert Balanced 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 GM and Calvert Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Calvert Balanced Portfolio, you can compare the effects of market volatilities on GM and Calvert Balanced 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 GM with a short position of Calvert Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Calvert Balanced.
Diversification Opportunities for GM and Calvert Balanced
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Calvert is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Calvert Balanced Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Balanced Por and GM 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 General Motors are associated (or correlated) with Calvert Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Balanced Por has no effect on the direction of GM i.e., GM and Calvert Balanced go up and down completely randomly.
Pair Corralation between GM and Calvert Balanced
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.9 times more return on investment than Calvert Balanced. However, GM is 3.9 times more volatile than Calvert Balanced Portfolio. It trades about 0.09 of its potential returns per unit of risk. Calvert Balanced Portfolio is currently generating about 0.14 per unit of risk. If you would invest 4,476 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,074 from holding General Motors or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Calvert Balanced Portfolio
Performance |
| Timeline |
| General Motors |
| Calvert Balanced Por |
GM and Calvert Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Calvert Balanced
The main advantage of trading using opposite GM and Calvert Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Calvert Balanced 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 Balanced will offset losses from the drop in Calvert Balanced's long position.The idea behind General Motors and Calvert Balanced Portfolio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Calvert Balanced vs. American Balanced Fund | Calvert Balanced vs. American Balanced Fund | Calvert Balanced vs. HUMANA INC | Calvert Balanced vs. Aquagold International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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