Correlation Between High Income and Calvert Moderate
Can any of the company-specific risk be diversified away by investing in both High Income 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 High Income and Calvert Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Income Fund and Calvert Moderate Allocation, you can compare the effects of market volatilities on High Income 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 High Income with a short position of Calvert Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Income and Calvert Moderate.
Diversification Opportunities for High Income and Calvert Moderate
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Calvert is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding High Income Fund 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 High Income 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 High Income Fund 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 High Income i.e., High Income and Calvert Moderate go up and down completely randomly.
Pair Corralation between High Income and Calvert Moderate
Assuming the 90 days horizon High Income Fund is expected to generate 0.37 times more return on investment than Calvert Moderate. However, High Income Fund is 2.69 times less risky than Calvert Moderate. It trades about 0.23 of its potential returns per unit of risk. Calvert Moderate Allocation is currently generating about 0.03 per unit of risk. If you would invest 863.00 in High Income Fund on August 24, 2024 and sell it today you would earn a total of 7.00 from holding High Income Fund or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Income Fund vs. Calvert Moderate Allocation
Performance |
| Timeline |
| High Income Fund |
| Calvert Moderate All |
High Income and Calvert Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Income and Calvert Moderate
The main advantage of trading using opposite High Income and Calvert Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Income 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.| High Income vs. Calvert Moderate Allocation | High Income vs. Pro Blend Moderate Term | High Income vs. Lifestyle Ii Moderate | High Income vs. Blackrock Moderate Prepared |
| Calvert Moderate vs. American Funds American | Calvert Moderate vs. American Funds American | Calvert Moderate vs. American Balanced | Calvert Moderate vs. American Balanced 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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