Correlation Between Calvert Balanced and Strategic Allocation

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

By analyzing existing cross correlation between Calvert Balanced Portfolio and Strategic Allocation Servative, you can compare the effects of market volatilities on Calvert Balanced and Strategic Allocation 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 Balanced with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Balanced and Strategic Allocation.

Diversification Opportunities for Calvert Balanced and Strategic Allocation

0.86

Correlation Coefficient

Calvert Balanced  Strategic Allocation

Very poor diversification

The 3 months correlation between Calvert and Strategic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Balanced Portfolio and Strategic Allocation Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Calvert Balanced 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 Balanced Portfolio are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Calvert Balanced i.e., Calvert Balanced and Strategic Allocation go up and down completely randomly.

Pair Corralation between Calvert Balanced and Strategic Allocation

Assuming the 90 days horizon Calvert Balanced Portfolio is expected to generate 1.25 times more return on investment than Strategic Allocation. However, Calvert Balanced is 1.25 times more volatile than Strategic Allocation Servative. It trades about 0.12 of its potential returns per unit of risk. Strategic Allocation Servative is currently generating about 0.08 per unit of risk. If you would invest  3,287  in Calvert Balanced Portfolio on September 12, 2024 and sell it today you would earn a total of  1,218  from holding Calvert Balanced Portfolio or generate 37.06% return on investment over 90 days.

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

Calvert Balanced Portfolio  vs.  Strategic Allocation Servative

Calvert Balanced Por

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Balanced Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strategic Allocation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Servative are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Strategic Allocation 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 Balanced and Strategic Allocation

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

The idea behind Calvert Balanced Portfolio and Strategic Allocation Servative 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.