Correlation Between Short Duration and Calvert Bond

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

By analyzing existing cross correlation between Short Duration Inflation and Calvert Bond Portfolio, you can compare the effects of market volatilities on Short Duration and Calvert Bond 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 Short Duration with a short position of Calvert Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Calvert Bond.

Diversification Opportunities for Short Duration and Calvert Bond

0.9

Correlation Coefficient

Short Duration  Calvert Bond

Almost no diversification

The 3 months correlation between Short and Calvert is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Calvert Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Bond Portfolio and Short Duration 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 Short Duration Inflation are associated (or correlated) with Calvert Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Bond Portfolio has no effect on the direction of Short Duration i.e., Short Duration and Calvert Bond go up and down completely randomly.

Pair Corralation between Short Duration and Calvert Bond

Assuming the 90 days horizon Short Duration is expected to generate 1.92 times less return on investment than Calvert Bond. But when comparing it to its historical volatility, Short Duration Inflation is 2.45 times less risky than Calvert Bond. It trades about 0.23 of its potential returns per unit of risk. Calvert Bond Portfolio is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,424  in Calvert Bond Portfolio on May 18, 2025 and sell it today you would earn a total of  47.00  from holding Calvert Bond Portfolio or generate 3.3% return on investment over 90 days.

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

Short Duration Inflation  vs.  Calvert Bond Portfolio

Short Duration Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Inflation are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Bond Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Bond Portfolio are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Calvert Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short Duration and Calvert Bond

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

The idea behind Short Duration Inflation and Calvert Bond Portfolio 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.