Correlation Between Caterpillar and Calamos Convertible
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Calamos Convertible 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 Caterpillar and Calamos Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Calamos Convertible And, you can compare the effects of market volatilities on Caterpillar and Calamos Convertible 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 Caterpillar with a short position of Calamos Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Calamos Convertible.
Diversification Opportunities for Caterpillar and Calamos Convertible
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Calamos is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Calamos Convertible And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Convertible And and Caterpillar 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 Caterpillar are associated (or correlated) with Calamos Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Convertible And has no effect on the direction of Caterpillar i.e., Caterpillar and Calamos Convertible go up and down completely randomly.
Pair Corralation between Caterpillar and Calamos Convertible
Considering the 90-day investment horizon Caterpillar is expected to generate 2.35 times more return on investment than Calamos Convertible. However, Caterpillar is 2.35 times more volatile than Calamos Convertible And. It trades about 0.14 of its potential returns per unit of risk. Calamos Convertible And is currently generating about 0.19 per unit of risk. If you would invest 34,695 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 5,870 from holding Caterpillar or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Calamos Convertible And
Performance |
| Timeline |
| Caterpillar |
| Calamos Convertible And |
Caterpillar and Calamos Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Calamos Convertible
The main advantage of trading using opposite Caterpillar and Calamos Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Calamos Convertible 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 Calamos Convertible will offset losses from the drop in Calamos Convertible's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Calamos Convertible vs. Calamos Global Dynamic | Calamos Convertible vs. Calamos Strategic Total | Calamos Convertible vs. Calamos LongShort Equity | Calamos Convertible vs. DTF Tax Free |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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