Correlation Between Pace International and Calvert International

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

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

Diversification Opportunities for Pace International and Calvert International

0.61

Correlation Coefficient

Pace International  Calvert International

Poor diversification

The 3 months correlation between Pace and Calvert is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Equity and Calvert International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert International and Pace International 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 Pace International Equity 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 Pace International i.e., Pace International and Calvert International go up and down completely randomly.

Pair Corralation between Pace International and Calvert International

Assuming the 90 days horizon Pace International Equity is expected to generate 0.97 times more return on investment than Calvert International. However, Pace International Equity is 1.03 times less risky than Calvert International. It trades about 0.08 of its potential returns per unit of risk. Calvert International Equity is currently generating about 0.07 per unit of risk. If you would invest  1,775  in Pace International Equity on January 28, 2025 and sell it today you would earn a total of  55.00  from holding Pace International Equity or generate 3.1% return on investment over 90 days.

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

Pace International Equity  vs.  Calvert International Equity

Pace International Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace International may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Calvert International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert International Equity are ranked lower than 1 (%) 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 Pace International and Calvert International

The main advantage of trading using opposite Pace International and Calvert International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International 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 Pace International Equity 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.