Correlation Between Calvert Short and Old Westbury

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

Diversification Opportunities for Calvert Short and Old Westbury

0.96

Correlation Coefficient

Calvert Short  Old Westbury

Almost no diversification

The 3 months correlation between Calvert and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Short Duration and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Calvert Short i.e., Calvert Short and Old Westbury go up and down completely randomly.

Pair Corralation between Calvert Short and Old Westbury

Assuming the 90 days horizon Calvert Short Duration is expected to generate 1.59 times more return on investment than Old Westbury. However, Calvert Short is 1.59 times more volatile than Old Westbury Short Term. It trades about 0.3 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.28 per unit of risk. If you would invest  1,554  in Calvert Short Duration on November 28, 2024 and sell it today you would earn a total of  11.00  from holding Calvert Short Duration or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Calvert Short Duration  vs.  Old Westbury Short Term

Calvert Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Short Duration are ranked lower than 12 (%) 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.

Old Westbury Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Short Term are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Old Westbury 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 Short and Old Westbury

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

The idea behind Calvert Short Duration and Old Westbury Short Term 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.