Correlation Between Calvert Focused and F/m Investments

Can any of the company-specific risk be diversified away by investing in both Calvert Focused and F/m Investments 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 Focused and F/m Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Focused Value and Fm Investments Large, you can compare the effects of market volatilities on Calvert Focused and F/m Investments 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 Focused with a short position of F/m Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Focused and F/m Investments.

Diversification Opportunities for Calvert Focused and F/m Investments

0.06

Correlation Coefficient

Calvert Focused  F/m Investments

Significant diversification

The 3 months correlation between Calvert and F/m is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Focused Value and Fm Investments Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm Investments Large and Calvert Focused 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 Focused Value are associated (or correlated) with F/m Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm Investments Large has no effect on the direction of Calvert Focused i.e., Calvert Focused and F/m Investments go up and down completely randomly.

Pair Corralation between Calvert Focused and F/m Investments

Assuming the 90 days horizon Calvert Focused Value is expected to under-perform the F/m Investments. But the mutual fund apears to be less risky and, when comparing its historical volatility, Calvert Focused Value is 1.79 times less risky than F/m Investments. The mutual fund trades about -0.38 of its potential returns per unit of risk. The Fm Investments Large is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  1,918  in Fm Investments Large on October 4, 2024 and sell it today you would lose (135.00) from holding Fm Investments Large or give up 7.04% of portfolio value over 90 days.

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

Calvert Focused Value  vs.  Fm Investments Large

Calvert Focused Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Focused Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Calvert Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fm Investments Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fm Investments Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, F/m Investments 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 Focused and F/m Investments

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

The idea behind Calvert Focused Value and Fm Investments Large 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.