Correlation Between Small Cap and Calvert Green
Can any of the company-specific risk be diversified away by investing in both Small Cap and Calvert Green 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 Small Cap and Calvert Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Calvert Green Bond, you can compare the effects of market volatilities on Small Cap and Calvert Green 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 Small Cap with a short position of Calvert Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Calvert Green.
Diversification Opportunities for Small Cap and Calvert Green
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Small and Calvert is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Calvert Green Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Green Bond and Small Cap 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 Small Cap Value are associated (or correlated) with Calvert Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Green Bond has no effect on the direction of Small Cap i.e., Small Cap and Calvert Green go up and down completely randomly.
Pair Corralation between Small Cap and Calvert Green
Assuming the 90 days horizon Small Cap is expected to generate 2.38 times less return on investment than Calvert Green. In addition to that, Small Cap is 3.59 times more volatile than Calvert Green Bond. It trades about 0.03 of its total potential returns per unit of risk. Calvert Green Bond is currently generating about 0.21 per unit of volatility. If you would invest 1,398 in Calvert Green Bond on September 7, 2024 and sell it today you would earn a total of 16.00 from holding Calvert Green Bond or generate 1.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Small Cap Value vs. Calvert Green Bond
Performance |
Timeline |
Small Cap Value |
Calvert Green Bond |
Small Cap and Calvert Green Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Small Cap and Calvert Green
The main advantage of trading using opposite Small Cap and Calvert Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Calvert Green 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 Green will offset losses from the drop in Calvert Green's long position.Small Cap vs. Investec Emerging Markets | Small Cap vs. Transamerica Emerging Markets | Small Cap vs. Mid Cap 15x Strategy | Small Cap vs. Ep Emerging Markets |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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