Correlation Between The Gold and Calvert Emerging

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

By analyzing existing cross correlation between The Gold Bullion and Calvert Emerging Markets, you can compare the effects of market volatilities on The Gold and Calvert Emerging 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 The Gold with a short position of Calvert Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Calvert Emerging.

Diversification Opportunities for The Gold and Calvert Emerging

0.33

Correlation Coefficient

The Gold  Calvert Emerging

Weak diversification

The 3 months correlation between The and Calvert is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and The Gold 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 The Gold Bullion are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of The Gold i.e., The Gold and Calvert Emerging go up and down completely randomly.

Pair Corralation between The Gold and Calvert Emerging

Assuming the 90 days horizon The Gold Bullion is expected to under-perform the Calvert Emerging. In addition to that, The Gold is 4.94 times more volatile than Calvert Emerging Markets. It trades about -0.12 of its total potential returns per unit of risk. Calvert Emerging Markets is currently generating about -0.02 per unit of volatility. If you would invest  1,171  in Calvert Emerging Markets on October 10, 2024 and sell it today you would lose (9.00) from holding Calvert Emerging Markets or give up 0.77% of portfolio value over 90 days.

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

The Gold Bullion  vs.  Calvert Emerging Markets

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Calvert Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with The Gold and Calvert Emerging

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

The idea behind The Gold Bullion and Calvert Emerging Markets 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.