Correlation Between Firsthand Technology and Calvert Small/mid-cap

Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Calvert Small/mid-cap 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 Firsthand Technology and Calvert Small/mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Firsthand Technology Opportunities and Calvert Smallmid Cap A, you can compare the effects of market volatilities on Firsthand Technology and Calvert Small/mid-cap 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 Firsthand Technology with a short position of Calvert Small/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Calvert Small/mid-cap.

Diversification Opportunities for Firsthand Technology and Calvert Small/mid-cap

0.34

Correlation Coefficient

Firsthand Technology  Calvert Small/mid-cap

Weak diversification

The 3 months correlation between Firsthand and Calvert is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Calvert Smallmid Cap A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Small/mid-cap and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Calvert Small/mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Small/mid-cap has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Calvert Small/mid-cap go up and down completely randomly.

Pair Corralation between Firsthand Technology and Calvert Small/mid-cap

Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the Calvert Small/mid-cap. In addition to that, Firsthand Technology is 1.68 times more volatile than Calvert Smallmid Cap A. It trades about -0.03 of its total potential returns per unit of risk. Calvert Smallmid Cap A is currently generating about 0.02 per unit of volatility. If you would invest  2,456  in Calvert Smallmid Cap A on October 6, 2024 and sell it today you would earn a total of  115.00  from holding Calvert Smallmid Cap A or generate 4.68% return on investment over 90 days.

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

Firsthand Technology Opportuni  vs.  Calvert Smallmid Cap A

Firsthand Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Technology Opportunities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Firsthand Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Calvert Small/mid-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 Small/mid-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Firsthand Technology and Calvert Small/mid-cap

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

The idea behind Firsthand Technology Opportunities 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.