Correlation Between Westwood Quality and Calvert Developed
Can any of the company-specific risk be diversified away by investing in both Westwood Quality and Calvert Developed 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 Westwood Quality and Calvert Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Quality Smidcap and Calvert Developed Market, you can compare the effects of market volatilities on Westwood Quality and Calvert Developed 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 Westwood Quality with a short position of Calvert Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Quality and Calvert Developed.
Diversification Opportunities for Westwood Quality and Calvert Developed
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westwood and Calvert is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Quality Smidcap and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market and Westwood Quality 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 Westwood Quality Smidcap are associated (or correlated) with Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Westwood Quality i.e., Westwood Quality and Calvert Developed go up and down completely randomly.
Pair Corralation between Westwood Quality and Calvert Developed
Assuming the 90 days horizon Westwood Quality Smidcap is expected to generate 1.3 times more return on investment than Calvert Developed. However, Westwood Quality is 1.3 times more volatile than Calvert Developed Market. It trades about 0.09 of its potential returns per unit of risk. Calvert Developed Market is currently generating about 0.05 per unit of risk. If you would invest 1,251 in Westwood Quality Smidcap on August 31, 2024 and sell it today you would earn a total of 492.00 from holding Westwood Quality Smidcap or generate 39.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Quality Smidcap vs. Calvert Developed Market
Performance |
| Timeline |
| Westwood Quality Smidcap |
| Calvert Developed Market |
Westwood Quality and Calvert Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Quality and Calvert Developed
The main advantage of trading using opposite Westwood Quality and Calvert Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Quality position performs unexpectedly, Calvert Developed 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 Developed will offset losses from the drop in Calvert Developed's long position.| Westwood Quality vs. Calvert Developed Market | Westwood Quality vs. Ep Emerging Markets | Westwood Quality vs. Pnc Emerging Markets | Westwood Quality vs. Goldman Sachs Emerging |
| Calvert Developed vs. Vanguard Total International | Calvert Developed vs. Vanguard Developed Markets | Calvert Developed vs. Vanguard Developed Markets | Calvert Developed vs. HUMANA INC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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