Correlation Between Calvert Developed and Ancorathelen Small

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

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

Diversification Opportunities for Calvert Developed and Ancorathelen Small

0.24

Correlation Coefficient

Calvert Developed  Ancorathelen Small

Modest diversification

The 3 months correlation between Calvert and Ancorathelen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Ancorathelen Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ancorathelen Small Mid and Calvert Developed 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 Developed Market are associated (or correlated) with Ancorathelen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ancorathelen Small Mid has no effect on the direction of Calvert Developed i.e., Calvert Developed and Ancorathelen Small go up and down completely randomly.

Pair Corralation between Calvert Developed and Ancorathelen Small

Assuming the 90 days horizon Calvert Developed Market is expected to generate 0.36 times more return on investment than Ancorathelen Small. However, Calvert Developed Market is 2.79 times less risky than Ancorathelen Small. It trades about -0.15 of its potential returns per unit of risk. Ancorathelen Small Mid Cap is currently generating about -0.32 per unit of risk. If you would invest  3,042  in Calvert Developed Market on October 11, 2024 and sell it today you would lose (67.00) from holding Calvert Developed Market or give up 2.2% of portfolio value over 90 days.

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

Calvert Developed Market  vs.  Ancorathelen Small Mid Cap

Calvert Developed Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ancorathelen Small Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ancorathelen Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ancorathelen Small 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 Developed and Ancorathelen Small

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

The idea behind Calvert Developed Market and Ancorathelen Small Mid Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.