Correlation Between Calvert Global and First Trust

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

Diversification Opportunities for Calvert Global and First Trust

0.37

Correlation Coefficient

Calvert Global  First Trust

Weak diversification

The 3 months correlation between Calvert and First is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and First Trust Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Water 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Water has no effect on the direction of Calvert Global i.e., Calvert Global and First Trust go up and down completely randomly.

Pair Corralation between Calvert Global and First Trust

Assuming the 90 days horizon Calvert Global Energy is expected to under-perform the First Trust. In addition to that, Calvert Global is 1.01 times more volatile than First Trust Water. It trades about -0.01 of its total potential returns per unit of risk. First Trust Water is currently generating about 0.05 per unit of volatility. If you would invest  9,766  in First Trust Water on September 27, 2024 and sell it today you would earn a total of  606.50  from holding First Trust Water or generate 6.21% return on investment over 90 days.

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

Calvert Global Energy  vs.  First Trust Water

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.

First Trust Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, First Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Calvert Global and First Trust

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

The idea behind Calvert Global Energy and First Trust Water 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.