Correlation Between Rational Strategic and Calvert Emerging

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

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

Diversification Opportunities for Rational Strategic and Calvert Emerging

-0.1

Correlation Coefficient

Rational Strategic  Calvert Emerging

Good diversification

The 3 months correlation between Rational and Calvert is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Rational Strategic 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 Rational Strategic Allocation are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Rational Strategic i.e., Rational Strategic and Calvert Emerging go up and down completely randomly.

Pair Corralation between Rational Strategic and Calvert Emerging

Assuming the 90 days horizon Rational Strategic Allocation is expected to generate 1.48 times more return on investment than Calvert Emerging. However, Rational Strategic is 1.48 times more volatile than Calvert Emerging Markets. It trades about 0.2 of its potential returns per unit of risk. Calvert Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  740.00  in Rational Strategic Allocation on May 19, 2025 and sell it today you would earn a total of  110.00  from holding Rational Strategic Allocation or generate 14.86% return on investment over 90 days.

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

Rational Strategic Allocation  vs.  Calvert Emerging Markets

Rational Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Strategic Allocation are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Strategic showed solid returns over the last few months and may actually be approaching a breakup point.

Calvert Emerging Markets

Risk-Adjusted Performance

Weak

Over the last 90 days Calvert Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Calvert Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Strategic and Calvert Emerging

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

The idea behind Rational Strategic Allocation and Calvert Emerging Markets 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.