Correlation Between Microsoft and Calvert Ultra-short

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

By analyzing existing cross correlation between Microsoft and Calvert Ultra Short Duration, you can compare the effects of market volatilities on Microsoft and Calvert Ultra-short 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 Microsoft with a short position of Calvert Ultra-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Calvert Ultra-short.

Diversification Opportunities for Microsoft and Calvert Ultra-short

-0.61

Correlation Coefficient

Microsoft  Calvert Ultra-short

Excellent diversification

The 3 months correlation between Microsoft and Calvert is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Calvert Ultra Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Ultra Short and Microsoft 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 Microsoft are associated (or correlated) with Calvert Ultra-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Ultra Short has no effect on the direction of Microsoft i.e., Microsoft and Calvert Ultra-short go up and down completely randomly.

Pair Corralation between Microsoft and Calvert Ultra-short

Given the investment horizon of 90 days Microsoft is expected to under-perform the Calvert Ultra-short. In addition to that, Microsoft is 15.19 times more volatile than Calvert Ultra Short Duration. It trades about -0.1 of its total potential returns per unit of risk. Calvert Ultra Short Duration is currently generating about 0.21 per unit of volatility. If you would invest  977.00  in Calvert Ultra Short Duration on December 23, 2024 and sell it today you would earn a total of  13.00  from holding Calvert Ultra Short Duration or generate 1.33% return on investment over 90 days.

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

Microsoft  vs.  Calvert Ultra Short Duration

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Calvert Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Ultra Short Duration are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Ultra-short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Calvert Ultra-short

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

The idea behind Microsoft and Calvert Ultra Short Duration 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.