Correlation Between Calvert Conservative and Europe 125x

Can any of the company-specific risk be diversified away by investing in both Calvert Conservative and Europe 125x 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 Europe 125x 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 Europe 125x Strategy, you can compare the effects of market volatilities on Calvert Conservative and Europe 125x 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 Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Conservative and Europe 125x.

Diversification Opportunities for Calvert Conservative and Europe 125x

0.64

Correlation Coefficient

Calvert Conservative  Europe 125x

Poor diversification

The 3 months correlation between Calvert and Europe is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy 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 Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Calvert Conservative i.e., Calvert Conservative and Europe 125x go up and down completely randomly.

Pair Corralation between Calvert Conservative and Europe 125x

Assuming the 90 days horizon Calvert Conservative is expected to generate 43.33 times less return on investment than Europe 125x. But when comparing it to its historical volatility, Calvert Conservative Allocation is 2.95 times less risky than Europe 125x. It trades about 0.01 of its potential returns per unit of risk. Europe 125x Strategy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7,678  in Europe 125x Strategy on December 30, 2024 and sell it today you would earn a total of  1,116  from holding Europe 125x Strategy or generate 14.54% return on investment over 90 days.

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

Calvert Conservative Allocatio  vs.  Europe 125x Strategy

Calvert Conservative

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Conservative Allocation are ranked lower than 1 (%) 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.

Europe 125x Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Europe 125x Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europe 125x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calvert Conservative and Europe 125x

The main advantage of trading using opposite Calvert Conservative and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.

The idea behind Calvert Conservative Allocation and Europe 125x Strategy 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.