Correlation Between Calvert Equity and Ultrasmall Cap

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

Diversification Opportunities for Calvert Equity and Ultrasmall Cap

0.89

Correlation Coefficient

Calvert Equity  Ultrasmall Cap

Very poor diversification

The 3 months correlation between Calvert and Ultrasmall is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Equity Portfolio and Ultrasmall Cap Profund Ultrasm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrasmall Cap Profund 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 Ultrasmall Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrasmall Cap Profund has no effect on the direction of Calvert Equity i.e., Calvert Equity and Ultrasmall Cap go up and down completely randomly.

Pair Corralation between Calvert Equity and Ultrasmall Cap

Assuming the 90 days horizon Calvert Equity is expected to generate 2.69 times less return on investment than Ultrasmall Cap. But when comparing it to its historical volatility, Calvert Equity Portfolio is 3.06 times less risky than Ultrasmall Cap. It trades about 0.22 of its potential returns per unit of risk. Ultrasmall Cap Profund Ultrasmall Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,968  in Ultrasmall Cap Profund Ultrasmall Cap on April 27, 2025 and sell it today you would earn a total of  1,489  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 29.97% return on investment over 90 days.

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

Calvert Equity Portfolio  vs.  Ultrasmall Cap Profund Ultrasm

Calvert Equity Portfolio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Portfolio are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Calvert Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ultrasmall Cap Profund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrasmall Cap Profund Ultrasmall Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrasmall Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calvert Equity and Ultrasmall Cap

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

The idea behind Calvert Equity Portfolio and Ultrasmall Cap Profund Ultrasmall Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.