Correlation Between Calvert Balanced and Calvert Large

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

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

Diversification Opportunities for Calvert Balanced and Calvert Large

0.97

Correlation Coefficient

Calvert Balanced  Calvert Large

Almost no diversification

The 3 months correlation between Calvert and Calvert is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Balanced Portfolio and Calvert Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Large Cap and Calvert Balanced 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 Balanced Portfolio are associated (or correlated) with Calvert Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Large Cap has no effect on the direction of Calvert Balanced i.e., Calvert Balanced and Calvert Large go up and down completely randomly.

Pair Corralation between Calvert Balanced and Calvert Large

Assuming the 90 days horizon Calvert Balanced is expected to generate 1.76 times less return on investment than Calvert Large. But when comparing it to its historical volatility, Calvert Balanced Portfolio is 1.59 times less risky than Calvert Large. It trades about 0.12 of its potential returns per unit of risk. Calvert Large Cap E is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,924  in Calvert Large Cap E on September 16, 2024 and sell it today you would earn a total of  321.00  from holding Calvert Large Cap E or generate 6.52% return on investment over 90 days.

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

Calvert Balanced Portfolio  vs.  Calvert Large Cap E

Calvert Balanced Por

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Balanced Portfolio are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Large Cap E are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calvert Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Calvert Balanced and Calvert Large

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

The idea behind Calvert Balanced Portfolio and Calvert Large Cap E 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.