Correlation Between Calamos Timpani and Vanguard Explorer
Can any of the company-specific risk be diversified away by investing in both Calamos Timpani and Vanguard Explorer 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 Timpani and Vanguard Explorer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calamos Timpani Smid and Vanguard Explorer Fund, you can compare the effects of market volatilities on Calamos Timpani and Vanguard Explorer 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 Timpani with a short position of Vanguard Explorer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calamos Timpani and Vanguard Explorer.
Diversification Opportunities for Calamos Timpani and Vanguard Explorer
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Calamos and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Calamos Timpani Smid and Vanguard Explorer Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Explorer and Calamos Timpani 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 Timpani Smid are associated (or correlated) with Vanguard Explorer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Explorer has no effect on the direction of Calamos Timpani i.e., Calamos Timpani and Vanguard Explorer go up and down completely randomly.
Pair Corralation between Calamos Timpani and Vanguard Explorer
Assuming the 90 days horizon Calamos Timpani Smid is expected to generate 1.23 times more return on investment than Vanguard Explorer. However, Calamos Timpani is 1.23 times more volatile than Vanguard Explorer Fund. It trades about 0.08 of its potential returns per unit of risk. Vanguard Explorer Fund is currently generating about 0.04 per unit of risk. If you would invest 965.00 in Calamos Timpani Smid on October 9, 2024 and sell it today you would earn a total of 579.00 from holding Calamos Timpani Smid or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calamos Timpani Smid vs. Vanguard Explorer Fund
Performance |
| Timeline |
| Calamos Timpani Smid |
| Vanguard Explorer |
Calamos Timpani and Vanguard Explorer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calamos Timpani and Vanguard Explorer
The main advantage of trading using opposite Calamos Timpani and Vanguard Explorer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calamos Timpani position performs unexpectedly, Vanguard Explorer 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 Vanguard Explorer will offset losses from the drop in Vanguard Explorer's long position.The idea behind Calamos Timpani Smid and Vanguard Explorer 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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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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