Correlation Between American Funds and Calvert Equity

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

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

Diversification Opportunities for American Funds and Calvert Equity

0.87

Correlation Coefficient

American Funds  Calvert Equity

Very poor diversification

The 3 months correlation between American and Calvert is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Conservative 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 American Funds 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 American Funds Conservative 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 American Funds i.e., American Funds and Calvert Equity go up and down completely randomly.

Pair Corralation between American Funds and Calvert Equity

Assuming the 90 days horizon American Funds Conservative is expected to generate 0.42 times more return on investment than Calvert Equity. However, American Funds Conservative is 2.38 times less risky than Calvert Equity. It trades about 0.28 of its potential returns per unit of risk. Calvert Equity Portfolio is currently generating about 0.09 per unit of risk. If you would invest  1,325  in American Funds Conservative on May 8, 2025 and sell it today you would earn a total of  78.00  from holding American Funds Conservative or generate 5.89% return on investment over 90 days.

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

American Funds Conservative  vs.  Calvert Equity Portfolio

American Funds Conse

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Conservative are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 6 (%) 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 American Funds and Calvert Equity

The main advantage of trading using opposite American Funds and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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 American Funds Conservative 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.