Correlation Between Calvert Short and Secured Options

Can any of the company-specific risk be diversified away by investing in both Calvert Short and Secured Options 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 Calvert Short and Secured Options into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Short Duration and Secured Options Portfolio, you can compare the effects of market volatilities on Calvert Short and Secured Options 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 Calvert Short with a short position of Secured Options. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Short and Secured Options.

Diversification Opportunities for Calvert Short and Secured Options

-0.56

Correlation Coefficient

Calvert Short  Secured Options

Excellent diversification

The 3 months correlation between Calvert and Secured is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Short Duration and Secured Options Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secured Options Portfolio and Calvert Short 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 Calvert Short Duration are associated (or correlated) with Secured Options. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secured Options Portfolio has no effect on the direction of Calvert Short i.e., Calvert Short and Secured Options go up and down completely randomly.

Pair Corralation between Calvert Short and Secured Options

Assuming the 90 days horizon Calvert Short is expected to generate 5.9 times less return on investment than Secured Options. But when comparing it to its historical volatility, Calvert Short Duration is 2.15 times less risky than Secured Options. It trades about 0.14 of its potential returns per unit of risk. Secured Options Portfolio is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  1,521  in Secured Options Portfolio on August 31, 2024 and sell it today you would earn a total of  35.00  from holding Secured Options Portfolio or generate 2.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Calvert Short Duration  vs.  Secured Options Portfolio

Calvert Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Short Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Secured Options Portfolio

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Secured Options Portfolio are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Secured Options is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Short and Secured Options

The main advantage of trading using opposite Calvert Short and Secured Options positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Short position performs unexpectedly, Secured Options 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 Secured Options will offset losses from the drop in Secured Options' long position.

The idea behind Calvert Short Duration and Secured Options 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.