Correlation Between Calvert Global and Touchstone Dividend

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

Diversification Opportunities for Calvert Global and Touchstone Dividend

0.66

Correlation Coefficient

Calvert Global  Touchstone Dividend

Poor diversification

The 3 months correlation between Calvert and Touchstone is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Energy and Touchstone Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Dividend 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 Touchstone Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Dividend has no effect on the direction of Calvert Global i.e., Calvert Global and Touchstone Dividend go up and down completely randomly.

Pair Corralation between Calvert Global and Touchstone Dividend

Assuming the 90 days horizon Calvert Global Energy is expected to under-perform the Touchstone Dividend. But the mutual fund apears to be less risky and, when comparing its historical volatility, Calvert Global Energy is 1.1 times less risky than Touchstone Dividend. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Touchstone Dividend Equity is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,916  in Touchstone Dividend Equity on October 6, 2024 and sell it today you would lose (122.00) from holding Touchstone Dividend Equity or give up 6.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Calvert Global Energy  vs.  Touchstone Dividend Equity

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.

Touchstone Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Dividend Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Touchstone Dividend 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 Global and Touchstone Dividend

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

The idea behind Calvert Global Energy and Touchstone Dividend Equity 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .