Correlation Between Calvert Global and Diamond Hill

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

Diversification Opportunities for Calvert Global and Diamond Hill

0.27

Correlation Coefficient

Calvert Global  Diamond Hill

Modest diversification

The 3 months correlation between Calvert and Diamond is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and Diamond Hill Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Short 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Short has no effect on the direction of Calvert Global i.e., Calvert Global and Diamond Hill go up and down completely randomly.

Pair Corralation between Calvert Global and Diamond Hill

Assuming the 90 days horizon Calvert Global Energy is expected to under-perform the Diamond Hill. In addition to that, Calvert Global is 12.78 times more volatile than Diamond Hill Short. It trades about -0.02 of its total potential returns per unit of risk. Diamond Hill Short is currently generating about 0.29 per unit of volatility. If you would invest  986.00  in Diamond Hill Short on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Diamond Hill Short or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Calvert Global Energy  vs.  Diamond Hill Short

Calvert Global Energy

Risk-Adjusted Performance

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 fairly strong technical and fundamental indicators, Calvert Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Diamond Hill Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Short are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Diamond Hill is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Global and Diamond Hill

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

The idea behind Calvert Global Energy and Diamond Hill Short 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.