Correlation Between Transamerica Emerging and Calamos Market
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Calamos Market 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 Transamerica Emerging and Calamos Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Calamos Market Neutral, you can compare the effects of market volatilities on Transamerica Emerging and Calamos Market 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 Transamerica Emerging with a short position of Calamos Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Calamos Market.
Diversification Opportunities for Transamerica Emerging and Calamos Market
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transamerica and Calamos is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Calamos Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Market Neutral and Transamerica Emerging 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 Transamerica Emerging Markets are associated (or correlated) with Calamos Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Market Neutral has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Calamos Market go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Calamos Market
Assuming the 90 days horizon Transamerica Emerging is expected to generate 1.13 times less return on investment than Calamos Market. In addition to that, Transamerica Emerging is 2.02 times more volatile than Calamos Market Neutral. It trades about 0.02 of its total potential returns per unit of risk. Calamos Market Neutral is currently generating about 0.06 per unit of volatility. If you would invest 1,340 in Calamos Market Neutral on September 4, 2024 and sell it today you would earn a total of 167.00 from holding Calamos Market Neutral or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Calamos Market Neutral
Performance |
| Timeline |
| Transamerica Emerging |
| Calamos Market Neutral |
Transamerica Emerging and Calamos Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Calamos Market
The main advantage of trading using opposite Transamerica Emerging and Calamos Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Calamos Market 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 Market will offset losses from the drop in Calamos Market's long position.The idea behind Transamerica Emerging Markets and Calamos Market Neutral 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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