Correlation Between Calvert Developed and Nuveen Orado

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

Diversification Opportunities for Calvert Developed and Nuveen Orado

0.45

Correlation Coefficient

Calvert Developed  Nuveen Orado

Very weak diversification

The 3 months correlation between Calvert and Nuveen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Nuveen Orado Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Orado Municipal 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 Nuveen Orado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Orado Municipal has no effect on the direction of Calvert Developed i.e., Calvert Developed and Nuveen Orado go up and down completely randomly.

Pair Corralation between Calvert Developed and Nuveen Orado

Assuming the 90 days horizon Calvert Developed Market is expected to under-perform the Nuveen Orado. In addition to that, Calvert Developed is 3.67 times more volatile than Nuveen Orado Municipal. It trades about -0.18 of its total potential returns per unit of risk. Nuveen Orado Municipal is currently generating about -0.22 per unit of volatility. If you would invest  1,016  in Nuveen Orado Municipal on September 27, 2024 and sell it today you would lose (13.00) from holding Nuveen Orado Municipal or give up 1.28% of portfolio value over 90 days.

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

Calvert Developed Market  vs.  Nuveen Orado Municipal

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.

Nuveen Orado Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Orado Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Nuveen Orado 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 Nuveen Orado

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

The idea behind Calvert Developed Market and Nuveen Orado Municipal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.