Correlation Between Calvert Moderate and T Rowe

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

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

Diversification Opportunities for Calvert Moderate and T Rowe

0.97

Correlation Coefficient

Calvert Moderate  T Rowe

Almost no diversification

The 3 months correlation between Calvert and PASTX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Calvert Moderate 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 Moderate Allocation are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and T Rowe go up and down completely randomly.

Pair Corralation between Calvert Moderate and T Rowe

Assuming the 90 days horizon Calvert Moderate is expected to generate 3.05 times less return on investment than T Rowe. But when comparing it to its historical volatility, Calvert Moderate Allocation is 2.27 times less risky than T Rowe. It trades about 0.35 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  3,880  in T Rowe Price on April 20, 2025 and sell it today you would earn a total of  1,573  from holding T Rowe Price or generate 40.54% return on investment over 90 days.

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

Calvert Moderate Allocation  vs.  T Rowe Price

Calvert Moderate All

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Moderate Allocation are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Moderate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

T Rowe Price

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 37 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, T Rowe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calvert Moderate and T Rowe

The main advantage of trading using opposite Calvert Moderate and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Calvert Moderate Allocation and T Rowe Price 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.