Correlation Between Red Oak and Calvert Large

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

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

Diversification Opportunities for Red Oak and Calvert Large

0.85

Correlation Coefficient

Red Oak  Calvert Large

Very poor diversification

The 3 months correlation between Red and Calvert is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Calvert Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Large Cap and Red Oak 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 Red Oak Technology are associated (or correlated) with Calvert Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Large Cap has no effect on the direction of Red Oak i.e., Red Oak and Calvert Large go up and down completely randomly.

Pair Corralation between Red Oak and Calvert Large

Assuming the 90 days horizon Red Oak Technology is expected to generate 1.19 times more return on investment than Calvert Large. However, Red Oak is 1.19 times more volatile than Calvert Large Cap. It trades about 0.32 of its potential returns per unit of risk. Calvert Large Cap is currently generating about 0.16 per unit of risk. If you would invest  4,660  in Red Oak Technology on May 21, 2025 and sell it today you would earn a total of  841.00  from holding Red Oak Technology or generate 18.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Red Oak Technology  vs.  Calvert Large Cap

Red Oak Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Red Oak Technology are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Red Oak showed solid returns over the last few months and may actually be approaching a breakup point.

Calvert Large Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Large Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Red Oak and Calvert Large

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

The idea behind Red Oak Technology and Calvert Large Cap 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.