Correlation Between Calvert Short and Columbia Greater

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

By analyzing existing cross correlation between Calvert Short Duration and Columbia Greater China, you can compare the effects of market volatilities on Calvert Short and Columbia Greater 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 Short with a short position of Columbia Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Short and Columbia Greater.

Diversification Opportunities for Calvert Short and Columbia Greater

0.87

Correlation Coefficient

Calvert Short  Columbia Greater

Very poor diversification

The 3 months correlation between Calvert and Columbia is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Short Duration and Columbia Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Greater China and Calvert Short 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 Short Duration are associated (or correlated) with Columbia Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Greater China has no effect on the direction of Calvert Short i.e., Calvert Short and Columbia Greater go up and down completely randomly.

Pair Corralation between Calvert Short and Columbia Greater

Assuming the 90 days horizon Calvert Short is expected to generate 10.63 times less return on investment than Columbia Greater. But when comparing it to its historical volatility, Calvert Short Duration is 13.8 times less risky than Columbia Greater. It trades about 0.24 of its potential returns per unit of risk. Columbia Greater China is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,728  in Columbia Greater China on December 22, 2024 and sell it today you would earn a total of  724.00  from holding Columbia Greater China or generate 19.42% return on investment over 90 days.

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

Calvert Short Duration  vs.  Columbia Greater China

Calvert Short Duration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Short Duration are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Greater China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Greater China are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Greater showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calvert Short and Columbia Greater

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

The idea behind Calvert Short Duration and Columbia Greater China 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.