Correlation Between Multisector Bond and Calvert Tax-free

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

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

Diversification Opportunities for Multisector Bond and Calvert Tax-free

0.32

Correlation Coefficient

Multisector Bond  Calvert Tax-free

Weak diversification

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

Pair Corralation between Multisector Bond and Calvert Tax-free

Assuming the 90 days horizon Multisector Bond Sma is expected to generate 1.81 times more return on investment than Calvert Tax-free. However, Multisector Bond is 1.81 times more volatile than Calvert Tax Free Responsible. It trades about 0.17 of its potential returns per unit of risk. Calvert Tax Free Responsible is currently generating about -0.03 per unit of risk. If you would invest  1,360  in Multisector Bond Sma on April 29, 2025 and sell it today you would earn a total of  43.00  from holding Multisector Bond Sma or generate 3.16% return on investment over 90 days.

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

Multisector Bond Sma  vs.  Calvert Tax Free Responsible

Multisector Bond Sma

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multisector Bond Sma are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multisector Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Tax Free

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calvert Tax Free Responsible has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Multisector Bond and Calvert Tax-free

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

The idea behind Multisector Bond Sma and Calvert Tax Free Responsible 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.