Correlation Between Victory Sycamore and Calvert Equity

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

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

Diversification Opportunities for Victory Sycamore and Calvert Equity

0.6

Correlation Coefficient

Victory Sycamore  Calvert Equity

Poor diversification

The 3 months correlation between Victory and Calvert is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Victory Sycamore Small and Calvert Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity and Victory Sycamore 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 Victory Sycamore Small are associated (or correlated) with Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity has no effect on the direction of Victory Sycamore i.e., Victory Sycamore and Calvert Equity go up and down completely randomly.

Pair Corralation between Victory Sycamore and Calvert Equity

Assuming the 90 days horizon Victory Sycamore Small is expected to under-perform the Calvert Equity. In addition to that, Victory Sycamore is 1.13 times more volatile than Calvert Equity Fund. It trades about -0.35 of its total potential returns per unit of risk. Calvert Equity Fund is currently generating about -0.25 per unit of volatility. If you would invest  10,299  in Calvert Equity Fund on September 28, 2024 and sell it today you would lose (896.00) from holding Calvert Equity Fund or give up 8.7% of portfolio value over 90 days.

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

Victory Sycamore Small  vs.  Calvert Equity Fund

Victory Sycamore Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Calvert Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Victory Sycamore and Calvert Equity

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

The idea behind Victory Sycamore Small and Calvert Equity Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.