Correlation Between Calvert Small/mid-cap and Pacific Funds

Can any of the company-specific risk be diversified away by investing in both Calvert Small/mid-cap and Pacific Funds 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 Small/mid-cap and Pacific Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Smallmid Cap A and Pacific Funds High, you can compare the effects of market volatilities on Calvert Small/mid-cap and Pacific Funds 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 Small/mid-cap with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Small/mid-cap and Pacific Funds.

Diversification Opportunities for Calvert Small/mid-cap and Pacific Funds

0.87

Correlation Coefficient

Calvert Small/mid-cap  Pacific Funds

Very poor diversification

The 3 months correlation between Calvert and Pacific is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Smallmid Cap A and Pacific Funds High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds High and Calvert Small/mid-cap 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 Smallmid Cap A are associated (or correlated) with Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds High has no effect on the direction of Calvert Small/mid-cap i.e., Calvert Small/mid-cap and Pacific Funds go up and down completely randomly.

Pair Corralation between Calvert Small/mid-cap and Pacific Funds

Assuming the 90 days horizon Calvert Smallmid Cap A is expected to under-perform the Pacific Funds. In addition to that, Calvert Small/mid-cap is 5.48 times more volatile than Pacific Funds High. It trades about -0.02 of its total potential returns per unit of risk. Pacific Funds High is currently generating about 0.01 per unit of volatility. If you would invest  932.00  in Pacific Funds High on February 28, 2025 and sell it today you would earn a total of  2.00  from holding Pacific Funds High or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Calvert Smallmid Cap A  vs.  Pacific Funds High

Calvert Small/mid-cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calvert Smallmid Cap A has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Calvert Small/mid-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pacific Funds High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific Funds High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Pacific Funds 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 Small/mid-cap and Pacific Funds

The main advantage of trading using opposite Calvert Small/mid-cap and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Small/mid-cap position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.

The idea behind Calvert Smallmid Cap A and Pacific Funds High 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.