Correlation Between Financial Industries and Calvert International

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

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

Diversification Opportunities for Financial Industries and Calvert International

0.94

Correlation Coefficient

Financial Industries  Calvert International

Almost no diversification

The 3 months correlation between Financial and Calvert is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Calvert International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert International and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Calvert International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert International has no effect on the direction of Financial Industries i.e., Financial Industries and Calvert International go up and down completely randomly.

Pair Corralation between Financial Industries and Calvert International

Assuming the 90 days horizon Financial Industries Fund is expected to generate 1.15 times more return on investment than Calvert International. However, Financial Industries is 1.15 times more volatile than Calvert International Equity. It trades about 0.18 of its potential returns per unit of risk. Calvert International Equity is currently generating about 0.13 per unit of risk. If you would invest  1,737  in Financial Industries Fund on April 24, 2025 and sell it today you would earn a total of  175.00  from holding Financial Industries Fund or generate 10.07% return on investment over 90 days.

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

Financial Industries Fund  vs.  Calvert International Equity

Financial Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Financial Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Calvert International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert International Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financial Industries and Calvert International

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

The idea behind Financial Industries Fund and Calvert International Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.