Correlation Between Calvert Global and Banks Ultrasector

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

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

Diversification Opportunities for Calvert Global and Banks Ultrasector

-0.58

Correlation Coefficient

Calvert Global  Banks Ultrasector

Excellent diversification

The 3 months correlation between Calvert and Banks is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and Banks Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banks Ultrasector Profund and Calvert Global 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 Global Energy are associated (or correlated) with Banks Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banks Ultrasector Profund has no effect on the direction of Calvert Global i.e., Calvert Global and Banks Ultrasector go up and down completely randomly.

Pair Corralation between Calvert Global and Banks Ultrasector

Assuming the 90 days horizon Calvert Global Energy is expected to under-perform the Banks Ultrasector. But the mutual fund apears to be less risky and, when comparing its historical volatility, Calvert Global Energy is 2.81 times less risky than Banks Ultrasector. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Banks Ultrasector Profund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,713  in Banks Ultrasector Profund on September 26, 2024 and sell it today you would earn a total of  1,208  from holding Banks Ultrasector Profund or generate 25.63% return on investment over 90 days.

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

Calvert Global Energy  vs.  Banks Ultrasector Profund

Calvert Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Banks Ultrasector Profund

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Banks Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Banks Ultrasector may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Calvert Global and Banks Ultrasector

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

The idea behind Calvert Global Energy and Banks Ultrasector Profund 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.