Correlation Between Growth Strategy and Calvert Bond

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

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

Diversification Opportunities for Growth Strategy and Calvert Bond

0.02

Correlation Coefficient

Growth Strategy  Calvert Bond

Significant diversification

The 3 months correlation between Growth and Calvert is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Calvert Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Bond Portfolio and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Calvert Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Bond Portfolio has no effect on the direction of Growth Strategy i.e., Growth Strategy and Calvert Bond go up and down completely randomly.

Pair Corralation between Growth Strategy and Calvert Bond

Assuming the 90 days horizon Growth Strategy is expected to generate 7.46 times less return on investment than Calvert Bond. In addition to that, Growth Strategy is 2.5 times more volatile than Calvert Bond Portfolio. It trades about 0.01 of its total potential returns per unit of risk. Calvert Bond Portfolio is currently generating about 0.14 per unit of volatility. If you would invest  1,420  in Calvert Bond Portfolio on December 29, 2024 and sell it today you would earn a total of  35.00  from holding Calvert Bond Portfolio or generate 2.46% return on investment over 90 days.

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

Growth Strategy Fund  vs.  Calvert Bond Portfolio

Growth Strategy

Risk-Adjusted Performance

Very Weak

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

Calvert Bond Portfolio

Risk-Adjusted Performance

OK

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

Pair Trading with Growth Strategy and Calvert Bond

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

The idea behind Growth Strategy Fund and Calvert Bond Portfolio 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.