Correlation Between Calvert Short and Capital Management
Can any of the company-specific risk be diversified away by investing in both Calvert Short and Capital Management 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 Short and Capital Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calvert Short Duration and Capital Management Mid Cap, you can compare the effects of market volatilities on Calvert Short and Capital Management 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 Short with a short position of Capital Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Short and Capital Management.
Diversification Opportunities for Calvert Short and Capital Management
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calvert and Capital is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Short Duration and Capital Management Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Management Mid and Calvert Short 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 Short Duration are associated (or correlated) with Capital Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Management Mid has no effect on the direction of Calvert Short i.e., Calvert Short and Capital Management go up and down completely randomly.
Pair Corralation between Calvert Short and Capital Management
Assuming the 90 days horizon Calvert Short is expected to generate 2.31 times less return on investment than Capital Management. But when comparing it to its historical volatility, Calvert Short Duration is 5.02 times less risky than Capital Management. It trades about 0.16 of its potential returns per unit of risk. Capital Management Mid Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,151 in Capital Management Mid Cap on April 29, 2025 and sell it today you would earn a total of 36.00 from holding Capital Management Mid Cap or generate 3.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Calvert Short Duration vs. Capital Management Mid Cap
Performance |
Timeline |
Calvert Short Duration |
Capital Management Mid |
Calvert Short and Capital Management Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Calvert Short and Capital Management
The main advantage of trading using opposite Calvert Short and Capital Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Short position performs unexpectedly, Capital Management 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 Capital Management will offset losses from the drop in Capital Management's long position.Calvert Short vs. Seafarer Overseas Growth | Calvert Short vs. Transamerica Emerging Markets | Calvert Short vs. Franklin Emerging Market | Calvert Short vs. Wcm Focused Emerging |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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