Correlation Between Calvert Bond and Small Midcap

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

By analyzing existing cross correlation between Calvert Bond Portfolio and Small Midcap Dividend Income, you can compare the effects of market volatilities on Calvert Bond and Small Midcap 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 Bond with a short position of Small Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Bond and Small Midcap.

Diversification Opportunities for Calvert Bond and Small Midcap

0.76

Correlation Coefficient

Calvert Bond  Small Midcap

Poor diversification

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

Pair Corralation between Calvert Bond and Small Midcap

Assuming the 90 days horizon Calvert Bond is expected to generate 1.8 times less return on investment than Small Midcap. But when comparing it to its historical volatility, Calvert Bond Portfolio is 3.4 times less risky than Small Midcap. It trades about 0.15 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,844  in Small Midcap Dividend Income on May 19, 2025 and sell it today you would earn a total of  88.00  from holding Small Midcap Dividend Income or generate 4.77% return on investment over 90 days.

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

Calvert Bond Portfolio  vs.  Small Midcap Dividend Income

Calvert Bond Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Bond Portfolio are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Midcap Dividend

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Small Midcap Dividend Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Small Midcap 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 Bond and Small Midcap

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

The idea behind Calvert Bond Portfolio and Small Midcap Dividend Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.