Correlation Between Calvert High and Nationwide Bny

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

By analyzing existing cross correlation between Calvert High Yield and Nationwide Bny Mellon, you can compare the effects of market volatilities on Calvert High and Nationwide Bny 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 High with a short position of Nationwide Bny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert High and Nationwide Bny.

Diversification Opportunities for Calvert High and Nationwide Bny

0.72

Correlation Coefficient

Calvert High  Nationwide Bny

Poor diversification

The 3 months correlation between Calvert and Nationwide is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Calvert High Yield and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon and Calvert High 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 High Yield are associated (or correlated) with Nationwide Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Calvert High i.e., Calvert High and Nationwide Bny go up and down completely randomly.

Pair Corralation between Calvert High and Nationwide Bny

Assuming the 90 days horizon Calvert High is expected to generate 6.37 times less return on investment than Nationwide Bny. But when comparing it to its historical volatility, Calvert High Yield is 5.35 times less risky than Nationwide Bny. It trades about 0.15 of its potential returns per unit of risk. Nationwide Bny Mellon is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,776  in Nationwide Bny Mellon on September 12, 2024 and sell it today you would earn a total of  282.00  from holding Nationwide Bny Mellon or generate 7.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Calvert High Yield  vs.  Nationwide Bny Mellon

Calvert High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Bny Mellon

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Bny Mellon are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nationwide Bny may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Calvert High and Nationwide Bny

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

The idea behind Calvert High Yield and Nationwide Bny Mellon 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.