Correlation Between California Municipal and Calvert Global

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

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

Diversification Opportunities for California Municipal and Calvert Global

0.33

Correlation Coefficient

California Municipal  Calvert Global

Weak diversification

The 3 months correlation between California and Calvert is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Calvert Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Global Energy and California Municipal 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 California Municipal Portfolio are associated (or correlated) with Calvert Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Global Energy has no effect on the direction of California Municipal i.e., California Municipal and Calvert Global go up and down completely randomly.

Pair Corralation between California Municipal and Calvert Global

Assuming the 90 days horizon California Municipal Portfolio is expected to under-perform the Calvert Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Municipal Portfolio is 4.74 times less risky than Calvert Global. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Calvert Global Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,054  in Calvert Global Energy on February 14, 2025 and sell it today you would earn a total of  82.00  from holding Calvert Global Energy or generate 7.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

California Municipal Portfolio  vs.  Calvert Global Energy

California Municipal

Risk-Adjusted Performance

Very Weak

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

Calvert Global Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Global Energy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Calvert Global may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with California Municipal and Calvert Global

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

The idea behind California Municipal Portfolio and Calvert Global Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.