Correlation Between Calculus VCT and Sage Group

Can any of the company-specific risk be diversified away by investing in both Calculus VCT and Sage Group 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 Calculus VCT and Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calculus VCT plc and Sage Group PLC, you can compare the effects of market volatilities on Calculus VCT and Sage Group 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 Calculus VCT with a short position of Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calculus VCT and Sage Group.

Diversification Opportunities for Calculus VCT and Sage Group

-0.48

Correlation Coefficient

Calculus VCT  Sage Group

Very good diversification

The 3 months correlation between Calculus and Sage is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Calculus VCT plc and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and Calculus VCT 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 Calculus VCT plc are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Calculus VCT i.e., Calculus VCT and Sage Group go up and down completely randomly.

Pair Corralation between Calculus VCT and Sage Group

Assuming the 90 days trading horizon Calculus VCT plc is expected to under-perform the Sage Group. But the stock apears to be less risky and, when comparing its historical volatility, Calculus VCT plc is 1.23 times less risky than Sage Group. The stock trades about -0.02 of its potential returns per unit of risk. The Sage Group PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  92,022  in Sage Group PLC on September 23, 2024 and sell it today you would earn a total of  36,978  from holding Sage Group PLC or generate 40.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Calculus VCT plc  vs.  Sage Group PLC

Calculus VCT plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calculus VCT plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sage Group PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sage Group PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sage Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calculus VCT and Sage Group

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

The idea behind Calculus VCT plc and Sage Group PLC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.