Correlation Between Calvert Developed and Pace International

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Can any of the company-specific risk be diversified away by investing in both Calvert Developed and Pace International 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 Calvert Developed and Pace International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Developed Market and Pace International Emerging, you can compare the effects of market volatilities on Calvert Developed and Pace International 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 Calvert Developed with a short position of Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Developed and Pace International.

Diversification Opportunities for Calvert Developed and Pace International

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Calvert and Pace is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International and Calvert Developed 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 Calvert Developed Market are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Calvert Developed i.e., Calvert Developed and Pace International go up and down completely randomly.

Pair Corralation between Calvert Developed and Pace International

Assuming the 90 days horizon Calvert Developed Market is expected to generate 0.99 times more return on investment than Pace International. However, Calvert Developed Market is 1.01 times less risky than Pace International. It trades about 0.06 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.05 per unit of risk. If you would invest  2,698  in Calvert Developed Market on April 11, 2025 and sell it today you would earn a total of  833.00  from holding Calvert Developed Market or generate 30.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Calvert Developed Market  vs.  Pace International Emerging

 Performance 
       Timeline  
Calvert Developed Market 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Developed Market are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Developed showed solid returns over the last few months and may actually be approaching a breakup point.
Pace International 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Emerging are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pace International showed solid returns over the last few months and may actually be approaching a breakup point.

Calvert Developed and Pace International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Calvert Developed and Pace International

The main advantage of trading using opposite Calvert Developed and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Developed position performs unexpectedly, Pace International 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 Pace International will offset losses from the drop in Pace International's long position.
The idea behind Calvert Developed Market and Pace International Emerging 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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