Correlation Between Calamos Phineus and Otter Creek
Can any of the company-specific risk be diversified away by investing in both Calamos Phineus and Otter Creek 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 Calamos Phineus and Otter Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calamos Phineus Longshort and Otter Creek Longshort, you can compare the effects of market volatilities on Calamos Phineus and Otter Creek 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 Calamos Phineus with a short position of Otter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calamos Phineus and Otter Creek.
Diversification Opportunities for Calamos Phineus and Otter Creek
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Calamos and Otter is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Calamos Phineus Longshort and Otter Creek Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Creek Longshort and Calamos Phineus 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 Calamos Phineus Longshort are associated (or correlated) with Otter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Creek Longshort has no effect on the direction of Calamos Phineus i.e., Calamos Phineus and Otter Creek go up and down completely randomly.
Pair Corralation between Calamos Phineus and Otter Creek
Assuming the 90 days horizon Calamos Phineus is expected to generate 1.46 times less return on investment than Otter Creek. But when comparing it to its historical volatility, Calamos Phineus Longshort is 2.07 times less risky than Otter Creek. It trades about 0.07 of its potential returns per unit of risk. Otter Creek Longshort is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,488 in Otter Creek Longshort on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Otter Creek Longshort or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calamos Phineus Longshort vs. Otter Creek Longshort
Performance |
| Timeline |
| Calamos Phineus Longshort |
| Otter Creek Longshort |
Calamos Phineus and Otter Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calamos Phineus and Otter Creek
The main advantage of trading using opposite Calamos Phineus and Otter Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calamos Phineus position performs unexpectedly, Otter Creek 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 Otter Creek will offset losses from the drop in Otter Creek's long position.The idea behind Calamos Phineus Longshort and Otter Creek Longshort 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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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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