Correlation Between Calvert Equity and Victory Sycamore

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

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

Diversification Opportunities for Calvert Equity and Victory Sycamore

0.85

Correlation Coefficient

Calvert Equity  Victory Sycamore

Very poor diversification

The 3 months correlation between Calvert and Victory is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Equity Portfolio and Victory Sycamore Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Small and Calvert Equity 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 Equity Portfolio are associated (or correlated) with Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Small has no effect on the direction of Calvert Equity i.e., Calvert Equity and Victory Sycamore go up and down completely randomly.

Pair Corralation between Calvert Equity and Victory Sycamore

Assuming the 90 days horizon Calvert Equity Portfolio is expected to generate 0.79 times more return on investment than Victory Sycamore. However, Calvert Equity Portfolio is 1.26 times less risky than Victory Sycamore. It trades about -0.21 of its potential returns per unit of risk. Victory Sycamore Small is currently generating about -0.3 per unit of risk. If you would invest  9,580  in Calvert Equity Portfolio on October 16, 2024 and sell it today you would lose (335.00) from holding Calvert Equity Portfolio or give up 3.5% of portfolio value over 90 days.

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

Calvert Equity Portfolio  vs.  Victory Sycamore Small

Calvert Equity Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Equity Portfolio 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.

Victory Sycamore Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Sycamore Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Calvert Equity and Victory Sycamore

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

The idea behind Calvert Equity Portfolio and Victory Sycamore Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.