Correlation Between Optimum International and Calvert Global

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

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

Diversification Opportunities for Optimum International and Calvert Global

0.84

Correlation Coefficient

Optimum International  Calvert Global

Very poor diversification

The 3 months correlation between Optimum and Calvert is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Optimum International Fund 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 Optimum 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 Optimum International Fund 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 Optimum International i.e., Optimum International and Calvert Global go up and down completely randomly.

Pair Corralation between Optimum International and Calvert Global

Assuming the 90 days horizon Optimum International is expected to generate 1.83 times less return on investment than Calvert Global. But when comparing it to its historical volatility, Optimum International Fund is 1.4 times less risky than Calvert Global. It trades about 0.29 of its potential returns per unit of risk. Calvert Global Energy is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  1,067  in Calvert Global Energy on March 2, 2024 and sell it today you would earn a total of  85.00  from holding Calvert Global Energy or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Optimum International Fund  vs.  Calvert Global Energy

Optimum International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum International Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Optimum International 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Global Energy are ranked lower than 10 (%) 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 July 2024.

Pair Trading with Optimum International and Calvert Global

The main advantage of trading using opposite Optimum International and Calvert Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum International 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 Optimum International Fund 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.