Correlation Between Strategic Allocation and Calvert Balanced

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

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

Diversification Opportunities for Strategic Allocation and Calvert Balanced

0.85

Correlation Coefficient

Strategic Allocation  Calvert Balanced

Very poor diversification

The 3 months correlation between Strategic and Calvert is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and Calvert Balanced Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Balanced Por and Strategic Allocation 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 Strategic Allocation Aggressive are associated (or correlated) with Calvert Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Balanced Por has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Calvert Balanced go up and down completely randomly.

Pair Corralation between Strategic Allocation and Calvert Balanced

Assuming the 90 days horizon Strategic Allocation Aggressive is expected to under-perform the Calvert Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Strategic Allocation Aggressive is 1.08 times less risky than Calvert Balanced. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Calvert Balanced Portfolio is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,510  in Calvert Balanced Portfolio on December 2, 2024 and sell it today you would lose (211.00) from holding Calvert Balanced Portfolio or give up 4.68% of portfolio value over 90 days.

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

Strategic Allocation Aggressiv  vs.  Calvert Balanced Portfolio

Strategic Allocation

Risk-Adjusted Performance

Very Weak

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

Calvert Balanced Por

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Strategic Allocation and Calvert Balanced

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

The idea behind Strategic Allocation Aggressive and Calvert Balanced 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.