Correlation Between Davis Real and Calvert Equity

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

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

Diversification Opportunities for Davis Real and Calvert Equity

0.24

Correlation Coefficient

Davis Real  Calvert Equity

Modest diversification

The 3 months correlation between Davis and Calvert is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Davis Real Estate and Calvert Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity Portfolio and Davis Real 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 Davis Real Estate are associated (or correlated) with Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity Portfolio has no effect on the direction of Davis Real i.e., Davis Real and Calvert Equity go up and down completely randomly.

Pair Corralation between Davis Real and Calvert Equity

Assuming the 90 days horizon Davis Real is expected to generate 1.2 times less return on investment than Calvert Equity. In addition to that, Davis Real is 1.31 times more volatile than Calvert Equity Portfolio. It trades about 0.06 of its total potential returns per unit of risk. Calvert Equity Portfolio is currently generating about 0.09 per unit of volatility. If you would invest  3,340  in Calvert Equity Portfolio on May 25, 2025 and sell it today you would earn a total of  125.00  from holding Calvert Equity Portfolio or generate 3.74% return on investment over 90 days.

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

Davis Real Estate  vs.  Calvert Equity Portfolio

Davis Real Estate

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Real Estate are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Davis Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Calvert Equity Portfolio

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Portfolio are ranked lower than 7 (%) 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.

Pair Trading with Davis Real and Calvert Equity

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

The idea behind Davis Real Estate and Calvert Equity Portfolio 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.