Correlation Between Small Cap and Calvert Global

Can any of the company-specific risk be diversified away by investing in both Small Cap and Calvert Global 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 Global 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 Global Value, you can compare the effects of market volatilities on Small Cap and Calvert Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Calvert Global.

Diversification Opportunities for Small Cap and Calvert Global

0.0

Correlation Coefficient

Small Cap  Calvert Global

Pay attention - limited upside

The 3 months correlation between Small and Calvert is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Calvert Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Global Value 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Global Value has no effect on the direction of Small Cap i.e., Small Cap and Calvert Global go up and down completely randomly.

Pair Corralation between Small Cap and Calvert Global

If you would invest (100.00) in Calvert Global Value on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Calvert Global Value or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Small Cap Value  vs.  Calvert Global Value

Small Cap Value

Risk-Adjusted Performance

Very Weak

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

Calvert Global Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Small Cap and Calvert Global

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

The idea behind Small Cap Value and Calvert Global Value 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.