Correlation Between Bank of America and Calvert Small

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

By analyzing existing cross correlation between Bank of America and Calvert Small Cap, you can compare the effects of market volatilities on Bank of America and Calvert Small 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 Bank of America with a short position of Calvert Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Calvert Small.

Diversification Opportunities for Bank of America and Calvert Small

0.68

Correlation Coefficient

Bank of America  Calvert Small

Poor diversification

The 3 months correlation between Bank and Calvert is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Calvert Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Small Cap and Bank of America 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 Bank of America are associated (or correlated) with Calvert Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Small Cap has no effect on the direction of Bank of America i.e., Bank of America and Calvert Small go up and down completely randomly.

Pair Corralation between Bank of America and Calvert Small

Considering the 90-day investment horizon Bank of America is expected to generate 1.22 times more return on investment than Calvert Small. However, Bank of America is 1.22 times more volatile than Calvert Small Cap. It trades about 0.13 of its potential returns per unit of risk. Calvert Small Cap is currently generating about 0.01 per unit of risk. If you would invest  4,136  in Bank of America on May 8, 2025 and sell it today you would earn a total of  420.00  from holding Bank of America or generate 10.15% return on investment over 90 days.

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

Bank of America  vs.  Calvert Small Cap

Bank of America

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Calvert Small Cap

Risk-Adjusted Performance

Weak

Over the last 90 days Calvert Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Calvert Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of America and Calvert Small

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

The idea behind Bank of America and Calvert Small Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.