Correlation Between DHI and Calix

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

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

Diversification Opportunities for DHI and Calix

0.24

Correlation Coefficient

DHI  Calix

Modest diversification

The 3 months correlation between DHI and Calix is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding DHI Group and Calix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calix Inc and DHI 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 DHI Group are associated (or correlated) with Calix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calix Inc has no effect on the direction of DHI i.e., DHI and Calix go up and down completely randomly.

Pair Corralation between DHI and Calix

Considering the 90-day investment horizon DHI Group is expected to generate 1.08 times more return on investment than Calix. However, DHI is 1.08 times more volatile than Calix Inc. It trades about 0.07 of its potential returns per unit of risk. Calix Inc is currently generating about 0.0 per unit of risk. If you would invest  166.00  in DHI Group on September 14, 2024 and sell it today you would earn a total of  19.00  from holding DHI Group or generate 11.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DHI Group  vs.  Calix Inc

DHI Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, DHI showed solid returns over the last few months and may actually be approaching a breakup point.

Calix Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calix Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Calix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DHI and Calix

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

The idea behind DHI Group and Calix Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.