Correlation Between Rational Defensive and Calvert Smallmid

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

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

Diversification Opportunities for Rational Defensive and Calvert Smallmid

0.43

Correlation Coefficient

Rational Defensive  Calvert Smallmid

Very weak diversification

The 3 months correlation between Rational and Calvert is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Calvert Smallmid Cap A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Smallmid Cap and Rational Defensive 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 Rational Defensive Growth are associated (or correlated) with Calvert Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Smallmid Cap has no effect on the direction of Rational Defensive i.e., Rational Defensive and Calvert Smallmid go up and down completely randomly.

Pair Corralation between Rational Defensive and Calvert Smallmid

Assuming the 90 days horizon Rational Defensive Growth is expected to generate 0.63 times more return on investment than Calvert Smallmid. However, Rational Defensive Growth is 1.58 times less risky than Calvert Smallmid. It trades about 0.22 of its potential returns per unit of risk. Calvert Smallmid Cap A is currently generating about -0.05 per unit of risk. If you would invest  3,715  in Rational Defensive Growth on September 20, 2024 and sell it today you would earn a total of  432.00  from holding Rational Defensive Growth or generate 11.63% return on investment over 90 days.

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

Rational Defensive Growth  vs.  Calvert Smallmid Cap A

Rational Defensive Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Calvert Smallmid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rational Defensive and Calvert Smallmid

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

The idea behind Rational Defensive Growth and Calvert Smallmid Cap A 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.