Correlation Between Calvert High and Steward International

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Can any of the company-specific risk be diversified away by investing in both Calvert High and Steward International 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 High and Steward International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert High Yield and Steward International Enhanced, you can compare the effects of market volatilities on Calvert High and Steward International 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 High with a short position of Steward International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert High and Steward International.

Diversification Opportunities for Calvert High and Steward International

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Calvert and Steward is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Calvert High Yield and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward International and Calvert High 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 High Yield are associated (or correlated) with Steward International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward International has no effect on the direction of Calvert High i.e., Calvert High and Steward International go up and down completely randomly.

Pair Corralation between Calvert High and Steward International

Assuming the 90 days horizon Calvert High is expected to generate 4.03 times less return on investment than Steward International. But when comparing it to its historical volatility, Calvert High Yield is 6.24 times less risky than Steward International. It trades about 0.13 of its potential returns per unit of risk. Steward International Enhanced is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,488  in Steward International Enhanced on September 6, 2024 and sell it today you would earn a total of  98.00  from holding Steward International Enhanced or generate 3.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Calvert High Yield  vs.  Steward International Enhanced

 Performance 
       Timeline  
Calvert High Yield 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Calvert High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Steward International 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Steward International Enhanced are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Steward International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert High and Steward International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Calvert High and Steward International

The main advantage of trading using opposite Calvert High and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert High position performs unexpectedly, Steward International 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 Steward International will offset losses from the drop in Steward International's long position.
The idea behind Calvert High Yield and Steward International Enhanced 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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