Correlation Between Vanguard Financials and Calamos International
Can any of the company-specific risk be diversified away by investing in both Vanguard Financials and Calamos International 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 Vanguard Financials and Calamos International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Financials Index and Calamos International Growth, you can compare the effects of market volatilities on Vanguard Financials and Calamos International 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 Vanguard Financials with a short position of Calamos International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Calamos International.
Diversification Opportunities for Vanguard Financials and Calamos International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Calamos is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Calamos International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos International and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Calamos International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos International has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Calamos International go up and down completely randomly.
Pair Corralation between Vanguard Financials and Calamos International
Assuming the 90 days horizon Vanguard Financials is expected to generate 3.06 times less return on investment than Calamos International. But when comparing it to its historical volatility, Vanguard Financials Index is 1.2 times less risky than Calamos International. It trades about 0.03 of its potential returns per unit of risk. Calamos International Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,821 in Calamos International Growth on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Calamos International Growth or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Financials Index vs. Calamos International Growth
Performance |
| Timeline |
| Vanguard Financials Index |
| Calamos International |
Vanguard Financials and Calamos International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Financials and Calamos International
The main advantage of trading using opposite Vanguard Financials and Calamos International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Financials position performs unexpectedly, Calamos International 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 International will offset losses from the drop in Calamos International's long position.The idea behind Vanguard Financials Index and Calamos International Growth 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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