Correlation Between Applied Finance and Calvert Long

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

By analyzing existing cross correlation between Applied Finance Explorer and Calvert Long Term Income, you can compare the effects of market volatilities on Applied Finance and Calvert Long 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 Applied Finance with a short position of Calvert Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Calvert Long.

Diversification Opportunities for Applied Finance and Calvert Long

0.4

Correlation Coefficient

Applied Finance  Calvert Long

Very weak diversification

The 3 months correlation between Applied and Calvert is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Calvert Long Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Long Term and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Calvert Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Long Term has no effect on the direction of Applied Finance i.e., Applied Finance and Calvert Long go up and down completely randomly.

Pair Corralation between Applied Finance and Calvert Long

Assuming the 90 days horizon Applied Finance Explorer is expected to generate 3.61 times more return on investment than Calvert Long. However, Applied Finance is 3.61 times more volatile than Calvert Long Term Income. It trades about 0.13 of its potential returns per unit of risk. Calvert Long Term Income is currently generating about 0.05 per unit of risk. If you would invest  2,069  in Applied Finance Explorer on May 2, 2025 and sell it today you would earn a total of  161.00  from holding Applied Finance Explorer or generate 7.78% return on investment over 90 days.

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

Applied Finance Explorer  vs.  Calvert Long Term Income

Applied Finance Explorer

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Finance Explorer are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Applied Finance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Calvert Long Term

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Long Term Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Long is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Finance and Calvert Long

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

The idea behind Applied Finance Explorer and Calvert Long Term Income 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.