Correlation Between Capital Management and Calvert Developed

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

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

Diversification Opportunities for Capital Management and Calvert Developed

0.76

Correlation Coefficient

Capital Management  Calvert Developed

Poor diversification

The 3 months correlation between Capital and Calvert is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Capital Management Mid Cap and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market and Capital Management 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 Capital Management Mid Cap are associated (or correlated) with Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Capital Management i.e., Capital Management and Calvert Developed go up and down completely randomly.

Pair Corralation between Capital Management and Calvert Developed

Assuming the 90 days horizon Capital Management is expected to generate 2.28 times less return on investment than Calvert Developed. In addition to that, Capital Management is 1.03 times more volatile than Calvert Developed Market. It trades about 0.11 of its total potential returns per unit of risk. Calvert Developed Market is currently generating about 0.26 per unit of volatility. If you would invest  3,190  in Calvert Developed Market on April 25, 2025 and sell it today you would earn a total of  383.00  from holding Calvert Developed Market or generate 12.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Capital Management Mid Cap  vs.  Calvert Developed Market

Capital Management Mid

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Management Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Capital Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Developed Market

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Developed Market are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Developed may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Capital Management and Calvert Developed

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

The idea behind Capital Management Mid Cap and Calvert Developed Market 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.