Correlation Between Calvert Equity and Transamerica Financial

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

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

Diversification Opportunities for Calvert Equity and Transamerica Financial

0.8

Correlation Coefficient

Calvert Equity  Transamerica Financial

Very poor diversification

The 3 months correlation between Calvert and Transamerica is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Equity Portfolio and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Calvert Equity 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 Equity Portfolio are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Calvert Equity i.e., Calvert Equity and Transamerica Financial go up and down completely randomly.

Pair Corralation between Calvert Equity and Transamerica Financial

Assuming the 90 days horizon Calvert Equity Portfolio is expected to generate 0.87 times more return on investment than Transamerica Financial. However, Calvert Equity Portfolio is 1.16 times less risky than Transamerica Financial. It trades about 0.08 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.06 per unit of risk. If you would invest  3,273  in Calvert Equity Portfolio on May 14, 2025 and sell it today you would earn a total of  111.00  from holding Calvert Equity Portfolio or generate 3.39% return on investment over 90 days.

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

Calvert Equity Portfolio  vs.  Transamerica Financial Life

Calvert Equity Portfolio

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transamerica Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Financial Life are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica Financial 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 Equity and Transamerica Financial

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

The idea behind Calvert Equity Portfolio and Transamerica Financial Life 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.