Correlation Between Calvert Smallcap and Merger Fund

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

By analyzing existing cross correlation between Calvert Smallcap Fund6 and The Merger Fund, you can compare the effects of market volatilities on Calvert Smallcap and Merger Fund 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 Calvert Smallcap with a short position of Merger Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Smallcap and Merger Fund.

Diversification Opportunities for Calvert Smallcap and Merger Fund

-0.83

Correlation Coefficient

Calvert Smallcap  Merger Fund

Pay attention - limited upside

The 3 months correlation between Calvert and Merger is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Smallcap Fund6 and The Merger Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merger Fund and Calvert Smallcap 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 Calvert Smallcap Fund6 are associated (or correlated) with Merger Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merger Fund has no effect on the direction of Calvert Smallcap i.e., Calvert Smallcap and Merger Fund go up and down completely randomly.

Pair Corralation between Calvert Smallcap and Merger Fund

Assuming the 90 days horizon Calvert Smallcap Fund6 is expected to under-perform the Merger Fund. In addition to that, Calvert Smallcap is 11.02 times more volatile than The Merger Fund. It trades about -0.12 of its total potential returns per unit of risk. The Merger Fund is currently generating about 0.33 per unit of volatility. If you would invest  1,790  in The Merger Fund on August 26, 2025 and sell it today you would earn a total of  34.00  from holding The Merger Fund or generate 1.9% return on investment over 90 days.

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

Calvert Smallcap Fund6  vs.  The Merger Fund

Calvert Smallcap Fund6

Risk-Adjusted Performance

Weakest

Over the last 90 days Calvert Smallcap Fund6 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Merger Fund

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Merger Fund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Merger Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calvert Smallcap and Merger Fund

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

The idea behind Calvert Smallcap Fund6 and The Merger Fund 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 CEOs Directory module to screen CEOs from public companies around the world.