Correlation Between CLO and Big Time
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By analyzing existing cross correlation between CLO and Big Time, you can compare the effects of market volatilities on CLO and Big Time 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 CLO with a short position of Big Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLO and Big Time.
Diversification Opportunities for CLO and Big Time
Significant diversification
The 3 months correlation between CLO and Big is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CLO and Big Time in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Time and CLO 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 CLO are associated (or correlated) with Big Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Time has no effect on the direction of CLO i.e., CLO and Big Time go up and down completely randomly.
Pair Corralation between CLO and Big Time
Assuming the 90 days trading horizon CLO is expected to generate 19.72 times more return on investment than Big Time. However, CLO is 19.72 times more volatile than Big Time. It trades about 0.23 of its potential returns per unit of risk. Big Time is currently generating about -0.47 per unit of risk. If you would invest 0.07 in CLO on November 8, 2024 and sell it today you would lose (0.06) from holding CLO or give up 82.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CLO vs. Big Time
Performance |
| Timeline |
| CLO |
| Big Time |
CLO and Big Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLO and Big Time
The main advantage of trading using opposite CLO and Big Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLO position performs unexpectedly, Big Time 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 Big Time will offset losses from the drop in Big Time's long position.The idea behind CLO and Big Time 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.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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