Correlation Between Calamos Dynamic and Prudential Government

Can any of the company-specific risk be diversified away by investing in both Calamos Dynamic and Prudential Government 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 Dynamic and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calamos Dynamic Convertible and Prudential Government Income, you can compare the effects of market volatilities on Calamos Dynamic and Prudential Government 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 Dynamic with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calamos Dynamic and Prudential Government.

Diversification Opportunities for Calamos Dynamic and Prudential Government

-0.09

Correlation Coefficient

Calamos Dynamic  Prudential Government

Good diversification

The 3 months correlation between Calamos and Prudential is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Calamos Dynamic Convertible and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Calamos Dynamic 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 Dynamic Convertible are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Calamos Dynamic i.e., Calamos Dynamic and Prudential Government go up and down completely randomly.

Pair Corralation between Calamos Dynamic and Prudential Government

Considering the 90-day investment horizon Calamos Dynamic Convertible is expected to generate 3.25 times more return on investment than Prudential Government. However, Calamos Dynamic is 3.25 times more volatile than Prudential Government Income. It trades about 0.04 of its potential returns per unit of risk. Prudential Government Income is currently generating about -0.09 per unit of risk. If you would invest  2,320  in Calamos Dynamic Convertible on September 4, 2024 and sell it today you would earn a total of  57.00  from holding Calamos Dynamic Convertible or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Calamos Dynamic Convertible  vs.  Prudential Government Income

Calamos Dynamic Conv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calamos Dynamic Convertible are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Calamos Dynamic is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Prudential Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Government Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Calamos Dynamic and Prudential Government

The main advantage of trading using opposite Calamos Dynamic and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calamos Dynamic position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.

The idea behind Calamos Dynamic Convertible and Prudential Government Income 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.