Correlation Between Pear Tree and Calvert Emerging
Can any of the company-specific risk be diversified away by investing in both Pear Tree and Calvert Emerging 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 Pear Tree and Calvert Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Calvert Emerging Markets, you can compare the effects of market volatilities on Pear Tree and Calvert Emerging 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 Pear Tree with a short position of Calvert Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Calvert Emerging.
Diversification Opportunities for Pear Tree and Calvert Emerging
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pear and Calvert is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Pear Tree i.e., Pear Tree and Calvert Emerging go up and down completely randomly.
Pair Corralation between Pear Tree and Calvert Emerging
Assuming the 90 days horizon Pear Tree Polaris is expected to generate 0.92 times more return on investment than Calvert Emerging. However, Pear Tree Polaris is 1.09 times less risky than Calvert Emerging. It trades about -0.19 of its potential returns per unit of risk. Calvert Emerging Markets is currently generating about -0.19 per unit of risk. If you would invest 1,613 in Pear Tree Polaris on August 31, 2024 and sell it today you would lose (53.00) from holding Pear Tree Polaris or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pear Tree Polaris vs. Calvert Emerging Markets
Performance |
| Timeline |
| Pear Tree Polaris |
| Calvert Emerging Markets |
Pear Tree and Calvert Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Calvert Emerging
The main advantage of trading using opposite Pear Tree and Calvert Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, Calvert Emerging 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 Emerging will offset losses from the drop in Calvert Emerging's long position.The idea behind Pear Tree Polaris and Calvert Emerging Markets 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 Emerging vs. Pear Tree Polaris | Calvert Emerging vs. Artisan High Income | Calvert Emerging vs. HUMANA INC | Calvert Emerging 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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