Correlation Between Calvert Large and Federated Prudent

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

By analyzing existing cross correlation between Calvert Large Cap and Federated Prudent Bear, you can compare the effects of market volatilities on Calvert Large and Federated Prudent 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 Large with a short position of Federated Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Large and Federated Prudent.

Diversification Opportunities for Calvert Large and Federated Prudent

-0.22

Correlation Coefficient

Calvert Large  Federated Prudent

Very good diversification

The 3 months correlation between Calvert and Federated is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Large Cap and Federated Prudent Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Prudent Bear and Calvert Large 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 Large Cap are associated (or correlated) with Federated Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Prudent Bear has no effect on the direction of Calvert Large i.e., Calvert Large and Federated Prudent go up and down completely randomly.

Pair Corralation between Calvert Large and Federated Prudent

Assuming the 90 days horizon Calvert Large Cap is expected to generate 0.1 times more return on investment than Federated Prudent. However, Calvert Large Cap is 9.65 times less risky than Federated Prudent. It trades about 0.25 of its potential returns per unit of risk. Federated Prudent Bear is currently generating about -0.01 per unit of risk. If you would invest  970.00  in Calvert Large Cap on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Calvert Large Cap or generate 0.41% return on investment over 90 days.

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

Calvert Large Cap  vs.  Federated Prudent Bear

Calvert Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Calvert Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Prudent Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Prudent Bear has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated Prudent 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 Large and Federated Prudent

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

The idea behind Calvert Large Cap and Federated Prudent Bear 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.