Correlation Between Calvert Large and Banking Fund

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

Diversification Opportunities for Calvert Large and Banking Fund

0.23

Correlation Coefficient

Calvert Large  Banking Fund

Modest diversification

The 3 months correlation between Calvert and Banking is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Large Cap and Banking Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Investor 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 Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Investor has no effect on the direction of Calvert Large i.e., Calvert Large and Banking Fund go up and down completely randomly.

Pair Corralation between Calvert Large and Banking Fund

Assuming the 90 days horizon Calvert Large Cap is expected to under-perform the Banking Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Calvert Large Cap is 13.3 times less risky than Banking Fund. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Banking Fund Investor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,200  in Banking Fund Investor on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Banking Fund Investor or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Calvert Large Cap  vs.  Banking Fund Investor

Calvert Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Large Cap has generated negative risk-adjusted returns adding no value to fund investors. 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.

Banking Fund Investor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banking Fund Investor are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Banking Fund 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 Banking Fund

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

The idea behind Calvert Large Cap and Banking Fund Investor 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.