Correlation Between Calvert Tax-free and Absolute Convertible

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

By analyzing existing cross correlation between Calvert Tax Free Responsible and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Calvert Tax-free and Absolute Convertible 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 Tax-free with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Tax-free and Absolute Convertible.

Diversification Opportunities for Calvert Tax-free and Absolute Convertible

0.32

Correlation Coefficient

Calvert Tax-free  Absolute Convertible

Weak diversification

The 3 months correlation between Calvert and Absolute is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Tax Free Responsible and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Calvert Tax-free 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 Tax Free Responsible are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Calvert Tax-free i.e., Calvert Tax-free and Absolute Convertible go up and down completely randomly.

Pair Corralation between Calvert Tax-free and Absolute Convertible

Assuming the 90 days horizon Calvert Tax-free is expected to generate 2.19 times less return on investment than Absolute Convertible. In addition to that, Calvert Tax-free is 2.11 times more volatile than Absolute Convertible Arbitrage. It trades about 0.08 of its total potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.39 per unit of volatility. If you would invest  1,149  in Absolute Convertible Arbitrage on May 27, 2025 and sell it today you would earn a total of  19.00  from holding Absolute Convertible Arbitrage or generate 1.65% return on investment over 90 days.

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

Calvert Tax Free Responsible  vs.  Absolute Convertible Arbitrage

Calvert Tax Free

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Tax Free Responsible are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolute Convertible

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Convertible Arbitrage are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Absolute Convertible 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 Tax-free and Absolute Convertible

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

The idea behind Calvert Tax Free Responsible and Absolute Convertible Arbitrage 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.