Correlation Between AES and Calvert Developed
Can any of the company-specific risk be diversified away by investing in both AES and Calvert Developed 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 AES and Calvert Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The AES and Calvert Developed Market, you can compare the effects of market volatilities on AES and Calvert Developed 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 AES with a short position of Calvert Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Calvert Developed.
Diversification Opportunities for AES and Calvert Developed
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AES and Calvert is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market and AES 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 AES are associated (or correlated) with Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of AES i.e., AES and Calvert Developed go up and down completely randomly.
Pair Corralation between AES and Calvert Developed
Considering the 90-day investment horizon The AES is expected to generate 4.63 times more return on investment than Calvert Developed. However, AES is 4.63 times more volatile than Calvert Developed Market. It trades about 0.16 of its potential returns per unit of risk. Calvert Developed Market is currently generating about 0.14 per unit of risk. If you would invest 994.00 in The AES on May 26, 2025 and sell it today you would earn a total of 355.00 from holding The AES or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The AES vs. Calvert Developed Market
Performance |
| Timeline |
| AES |
| Calvert Developed Market |
AES and Calvert Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES and Calvert Developed
The main advantage of trading using opposite AES and Calvert Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Calvert Developed 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 Developed will offset losses from the drop in Calvert Developed's long position.The idea behind The AES and Calvert Developed Market 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.| Calvert Developed vs. State Street Equity | Calvert Developed vs. American Express | Calvert Developed vs. Microsoft | Calvert Developed vs. Procter Gamble |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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