Correlation Between Calvert Conservative and Payden Global

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

By analyzing existing cross correlation between Calvert Conservative Allocation and Payden Global Low, you can compare the effects of market volatilities on Calvert Conservative and Payden Global 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 Conservative with a short position of Payden Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and Payden Global.

Diversification Opportunities for Calvert Conservative and Payden Global

0.54

Correlation Coefficient

Calvert Conservative  Payden Global

Very weak diversification

The 3 months correlation between Calvert and Payden is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and Payden Global Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Global Low and Calvert Conservative 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 Conservative Allocation are associated (or correlated) with Payden Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Global Low has no effect on the direction of Calvert Conservative i.e., Calvert Conservative and Payden Global go up and down completely randomly.

Pair Corralation between Calvert Conservative and Payden Global

Assuming the 90 days horizon Calvert Conservative Allocation is expected to generate 2.63 times more return on investment than Payden Global. However, Calvert Conservative is 2.63 times more volatile than Payden Global Low. It trades about 0.03 of its potential returns per unit of risk. Payden Global Low is currently generating about -0.03 per unit of risk. If you would invest  1,832  in Calvert Conservative Allocation on September 13, 2024 and sell it today you would earn a total of  11.00  from holding Calvert Conservative Allocation or generate 0.6% return on investment over 90 days.

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

Calvert Conservative Allocatio  vs.  Payden Global Low

Calvert Conservative

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Conservative Allocation are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Calvert Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden Global Low

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payden Global Low has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Payden Global 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 Conservative and Payden Global

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

The idea behind Calvert Conservative Allocation and Payden Global Low 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.