Correlation Between Gabelli Healthcare and Calvert Emerging

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

By analyzing existing cross correlation between The Gabelli Healthcare and Calvert Emerging Markets, you can compare the effects of market volatilities on Gabelli Healthcare and Calvert Emerging 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 Gabelli Healthcare with a short position of Calvert Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Healthcare and Calvert Emerging.

Diversification Opportunities for Gabelli Healthcare and Calvert Emerging

0.94

Correlation Coefficient

Gabelli Healthcare  Calvert Emerging

Almost no diversification

The 3 months correlation between Gabelli and Calvert is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Gabelli Healthcare 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 The Gabelli Healthcare are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Calvert Emerging go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Calvert Emerging

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the Calvert Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Healthcare is 1.03 times less risky than Calvert Emerging. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Calvert Emerging Markets is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,110  in Calvert Emerging Markets on October 7, 2024 and sell it today you would earn a total of  5.00  from holding Calvert Emerging Markets or generate 0.45% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  Calvert Emerging Markets

The Gabelli Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Healthcare 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.

Calvert Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Emerging Markets 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 Gabelli Healthcare and Calvert Emerging

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

The idea behind The Gabelli Healthcare and Calvert Emerging Markets 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.