Correlation Between Moderately Aggressive and Calvert Equity

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

Diversification Opportunities for Moderately Aggressive and Calvert Equity

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Moderately and Calvert is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced and Calvert Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity and Moderately Aggressive 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 Moderately Aggressive Balanced 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 Moderately Aggressive i.e., Moderately Aggressive and Calvert Equity go up and down completely randomly.

Pair Corralation between Moderately Aggressive and Calvert Equity

Assuming the 90 days horizon Moderately Aggressive Balanced is expected to generate 0.67 times more return on investment than Calvert Equity. However, Moderately Aggressive Balanced is 1.49 times less risky than Calvert Equity. It trades about 0.3 of its potential returns per unit of risk. Calvert Equity Fund is currently generating about 0.18 per unit of risk. If you would invest  1,143  in Moderately Aggressive Balanced on April 25, 2025 and sell it today you would earn a total of  109.00  from holding Moderately Aggressive Balanced or generate 9.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Moderately Aggressive Balanced  vs.  Calvert Equity Fund

 Performance 
       Timeline  
Moderately Aggressive 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Moderately Aggressive Balanced are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Moderately Aggressive may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Calvert Equity 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calvert Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Moderately Aggressive and Calvert Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Moderately Aggressive and Calvert Equity

The main advantage of trading using opposite Moderately Aggressive and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderately Aggressive 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 Moderately Aggressive Balanced 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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