Correlation Between Calvert Conservative and Calvert Equity

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

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

Diversification Opportunities for Calvert Conservative and Calvert Equity

0.94

Correlation Coefficient

Calvert Conservative  Calvert Equity

Almost no diversification

The 3 months correlation between Calvert and Calvert is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Conservative Allocatio and Calvert Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity and Calvert Conservative 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 Conservative Allocation 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 Calvert Conservative i.e., Calvert Conservative and Calvert Equity go up and down completely randomly.

Pair Corralation between Calvert Conservative and Calvert Equity

Assuming the 90 days horizon Calvert Conservative is expected to generate 1.72 times less return on investment than Calvert Equity. But when comparing it to its historical volatility, Calvert Conservative Allocation is 2.31 times less risky than Calvert Equity. It trades about 0.33 of its potential returns per unit of risk. Calvert Equity Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  8,560  in Calvert Equity Fund on April 20, 2025 and sell it today you would earn a total of  1,116  from holding Calvert Equity Fund or generate 13.04% return on investment over 90 days.

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

Calvert Conservative Allocatio  vs.  Calvert Equity Fund

Calvert Conservative

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Conservative Allocation are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Conservative may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Calvert Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Fund are ranked lower than 19 (%) 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.

Pair Trading with Calvert Conservative and Calvert Equity

The main advantage of trading using opposite Calvert Conservative and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Conservative 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 Calvert Conservative Allocation 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.