Correlation Between Calvert Moderate and Calvert Unconstrained

Can any of the company-specific risk be diversified away by investing in both Calvert Moderate and Calvert Unconstrained 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 Calvert Unconstrained 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 Calvert Unconstrained Bond, you can compare the effects of market volatilities on Calvert Moderate and Calvert Unconstrained 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 Calvert Unconstrained. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and Calvert Unconstrained.

Diversification Opportunities for Calvert Moderate and Calvert Unconstrained

0.94

Correlation Coefficient

Calvert Moderate  Calvert Unconstrained

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 Moderate Allocation and Calvert Unconstrained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Unconstrained 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 Calvert Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Unconstrained has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and Calvert Unconstrained go up and down completely randomly.

Pair Corralation between Calvert Moderate and Calvert Unconstrained

Assuming the 90 days horizon Calvert Moderate Allocation is expected to generate 2.89 times more return on investment than Calvert Unconstrained. However, Calvert Moderate is 2.89 times more volatile than Calvert Unconstrained Bond. It trades about 0.27 of its potential returns per unit of risk. Calvert Unconstrained Bond is currently generating about 0.17 per unit of risk. If you would invest  2,160  in Calvert Moderate Allocation on April 30, 2025 and sell it today you would earn a total of  172.00  from holding Calvert Moderate Allocation or generate 7.96% 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.  Calvert Unconstrained Bond

Calvert Moderate All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Moderate Allocation are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calvert Moderate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Calvert Unconstrained

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Unconstrained Bond are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Unconstrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Moderate and Calvert Unconstrained

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

The idea behind Calvert Moderate Allocation and Calvert Unconstrained Bond 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.