Correlation Between Value Fund and Calvert Balanced

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

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

Diversification Opportunities for Value Fund and Calvert Balanced

0.88

Correlation Coefficient

Value Fund  Calvert Balanced

Very poor diversification

The 3 months correlation between Value and Calvert is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Investor 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 Value Fund 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 Value Fund Investor 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 Value Fund i.e., Value Fund and Calvert Balanced go up and down completely randomly.

Pair Corralation between Value Fund and Calvert Balanced

Assuming the 90 days horizon Value Fund Investor is expected to generate 1.2 times more return on investment than Calvert Balanced. However, Value Fund is 1.2 times more volatile than Calvert Balanced Portfolio. It trades about 0.12 of its potential returns per unit of risk. Calvert Balanced Portfolio is currently generating about 0.13 per unit of risk. If you would invest  836.00  in Value Fund Investor on September 12, 2024 and sell it today you would earn a total of  36.00  from holding Value Fund Investor or generate 4.31% return on investment over 90 days.

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

Value Fund Investor  vs.  Calvert Balanced Portfolio

Value Fund Investor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Fund Investor are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Value Fund 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Balanced Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. 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 Value Fund and Calvert Balanced

The main advantage of trading using opposite Value Fund and Calvert Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund 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 Value Fund Investor 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..