Correlation Between Calvert Global and Horizon Defensive

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

By analyzing existing cross correlation between Calvert Global Energy and Horizon Defensive Equity, you can compare the effects of market volatilities on Calvert Global and Horizon Defensive 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 Global with a short position of Horizon Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Global and Horizon Defensive.

Diversification Opportunities for Calvert Global and Horizon Defensive

-0.45

Correlation Coefficient

Calvert Global  Horizon Defensive

Very good diversification

The 3 months correlation between Calvert and Horizon is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity and Calvert Global 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 Global Energy are associated (or correlated) with Horizon Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Calvert Global i.e., Calvert Global and Horizon Defensive go up and down completely randomly.

Pair Corralation between Calvert Global and Horizon Defensive

Assuming the 90 days horizon Calvert Global Energy is expected to generate 1.17 times more return on investment than Horizon Defensive. However, Calvert Global is 1.17 times more volatile than Horizon Defensive Equity. It trades about 0.12 of its potential returns per unit of risk. Horizon Defensive Equity is currently generating about 0.07 per unit of risk. If you would invest  1,091  in Calvert Global Energy on September 13, 2024 and sell it today you would earn a total of  15.00  from holding Calvert Global Energy or generate 1.37% return on investment over 90 days.

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

Calvert Global Energy  vs.  Horizon Defensive Equity

Calvert Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Global Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Calvert Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Horizon Defensive Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Defensive Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Defensive 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 Global and Horizon Defensive

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

The idea behind Calvert Global Energy and Horizon Defensive Equity 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.