Correlation Between Ultrasmall Cap and Calvert Developed

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

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

Diversification Opportunities for Ultrasmall Cap and Calvert Developed

0.5

Correlation Coefficient

Ultrasmall Cap  Calvert Developed

Very weak diversification

The 3 months correlation between Ultrasmall and Calvert is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market and Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap are associated (or correlated) with Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Ultrasmall Cap i.e., Ultrasmall Cap and Calvert Developed go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Calvert Developed

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to generate 3.12 times more return on investment than Calvert Developed. However, Ultrasmall Cap is 3.12 times more volatile than Calvert Developed Market. It trades about 0.18 of its potential returns per unit of risk. Calvert Developed Market is currently generating about 0.21 per unit of risk. If you would invest  5,019  in Ultrasmall Cap Profund Ultrasmall Cap on May 1, 2025 and sell it today you would earn a total of  1,332  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 26.54% return on investment over 90 days.

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

Ultrasmall Cap Profund Ultrasm  vs.  Calvert Developed Market

Ultrasmall Cap Profund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrasmall Cap Profund Ultrasmall Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrasmall Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Calvert Developed Market

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Developed Market are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Calvert Developed may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Ultrasmall Cap and Calvert Developed

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

The idea behind Ultrasmall Cap Profund Ultrasmall Cap and Calvert Developed Market 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.