Correlation Between Calvert Moderate and Target Retirement

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

By analyzing existing cross correlation between Calvert Moderate Allocation and Target Retirement 2040, you can compare the effects of market volatilities on Calvert Moderate and Target Retirement 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 Moderate with a short position of Target Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and Target Retirement.

Diversification Opportunities for Calvert Moderate and Target Retirement

0.99

Correlation Coefficient

Calvert Moderate  Target Retirement

No risk reduction

The 3 months correlation between Calvert and Target is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation and Target Retirement 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Retirement 2040 and Calvert Moderate 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 Moderate Allocation are associated (or correlated) with Target Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Retirement 2040 has no effect on the direction of Calvert Moderate i.e., Calvert Moderate and Target Retirement go up and down completely randomly.

Pair Corralation between Calvert Moderate and Target Retirement

Assuming the 90 days horizon Calvert Moderate is expected to generate 1.23 times less return on investment than Target Retirement. But when comparing it to its historical volatility, Calvert Moderate Allocation is 1.14 times less risky than Target Retirement. It trades about 0.13 of its potential returns per unit of risk. Target Retirement 2040 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,426  in Target Retirement 2040 on August 11, 2025 and sell it today you would earn a total of  63.00  from holding Target Retirement 2040 or generate 4.42% return on investment over 90 days.

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

Calvert Moderate Allocation  vs.  Target Retirement 2040

Calvert Moderate All

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Moderate Allocation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Target Retirement 2040

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Target Retirement 2040 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Target Retirement 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 Moderate and Target Retirement

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

The idea behind Calvert Moderate Allocation and Target Retirement 2040 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.