Correlation Between American Funds and Calvert Global

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

By analyzing existing cross correlation between American Funds Retirement and Calvert Global Energy, you can compare the effects of market volatilities on American Funds and Calvert Global 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 American Funds with a short position of Calvert Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Calvert Global.

Diversification Opportunities for American Funds and Calvert Global

0.59

Correlation Coefficient

American Funds  Calvert Global

Very weak diversification

The 3 months correlation between American and Calvert is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Calvert Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Global Energy and American Funds 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 American Funds Retirement are associated (or correlated) with Calvert Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Global Energy has no effect on the direction of American Funds i.e., American Funds and Calvert Global go up and down completely randomly.

Pair Corralation between American Funds and Calvert Global

Assuming the 90 days horizon American Funds Retirement is expected to generate 0.45 times more return on investment than Calvert Global. However, American Funds Retirement is 2.21 times less risky than Calvert Global. It trades about 0.12 of its potential returns per unit of risk. Calvert Global Energy is currently generating about -0.02 per unit of risk. If you would invest  1,246  in American Funds Retirement on October 22, 2024 and sell it today you would earn a total of  12.00  from holding American Funds Retirement or generate 0.96% return on investment over 90 days.

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

American Funds Retirement  vs.  Calvert Global Energy

American Funds Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Calvert Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Global Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with American Funds and Calvert Global

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

The idea behind American Funds Retirement and Calvert Global Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.