Correlation Between Calvert Developed and Destinations Equity

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

Diversification Opportunities for Calvert Developed and Destinations Equity

0.51

Correlation Coefficient

Calvert Developed  Destinations Equity

Very weak diversification

The 3 months correlation between Calvert and Destinations is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Destinations Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Equity 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 Destinations Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Equity has no effect on the direction of Calvert Developed i.e., Calvert Developed and Destinations Equity go up and down completely randomly.

Pair Corralation between Calvert Developed and Destinations Equity

Assuming the 90 days horizon Calvert Developed is expected to generate 1.96 times less return on investment than Destinations Equity. In addition to that, Calvert Developed is 1.38 times more volatile than Destinations Equity Income. It trades about 0.03 of its total potential returns per unit of risk. Destinations Equity Income is currently generating about 0.09 per unit of volatility. If you would invest  1,042  in Destinations Equity Income on October 3, 2024 and sell it today you would earn a total of  165.00  from holding Destinations Equity Income or generate 15.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

Calvert Developed Market  vs.  Destinations Equity Income

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Destinations Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Equity 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 Destinations Equity

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

The idea behind Calvert Developed Market and Destinations Equity Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.