Correlation Between Calvert Aggressive and Ariel International

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

By analyzing existing cross correlation between Calvert Aggressive Allocation and Ariel International Fund, you can compare the effects of market volatilities on Calvert Aggressive and Ariel International 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 Aggressive with a short position of Ariel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Aggressive and Ariel International.

Diversification Opportunities for Calvert Aggressive and Ariel International

0.35

Correlation Coefficient

Calvert Aggressive  Ariel International

Weak diversification

The 3 months correlation between Calvert and Ariel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Aggressive Allocation and Ariel International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel International and Calvert Aggressive 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 Aggressive Allocation are associated (or correlated) with Ariel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel International has no effect on the direction of Calvert Aggressive i.e., Calvert Aggressive and Ariel International go up and down completely randomly.

Pair Corralation between Calvert Aggressive and Ariel International

Assuming the 90 days horizon Calvert Aggressive Allocation is expected to under-perform the Ariel International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Calvert Aggressive Allocation is 1.36 times less risky than Ariel International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Ariel International Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Ariel International Fund on December 1, 2024 and sell it today you would earn a total of  131.00  from holding Ariel International Fund or generate 9.37% return on investment over 90 days.

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

Calvert Aggressive Allocation  vs.  Ariel International Fund

Calvert Aggressive

Risk-Adjusted Performance

Very Weak

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

Ariel International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ariel International Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ariel International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Calvert Aggressive and Ariel International

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

The idea behind Calvert Aggressive Allocation and Ariel International Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.