Correlation Between Federated Premier and Calamos LongShort

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

By analyzing existing cross correlation between Federated Premier Municipal and Calamos LongShort Equity, you can compare the effects of market volatilities on Federated Premier and Calamos LongShort 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 Federated Premier with a short position of Calamos LongShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Calamos LongShort.

Diversification Opportunities for Federated Premier and Calamos LongShort

-0.23

Correlation Coefficient

Federated Premier  Calamos LongShort

Very good diversification

The 3 months correlation between Federated and Calamos is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Calamos LongShort Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos LongShort Equity and Federated Premier 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 Federated Premier Municipal are associated (or correlated) with Calamos LongShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos LongShort Equity has no effect on the direction of Federated Premier i.e., Federated Premier and Calamos LongShort go up and down completely randomly.

Pair Corralation between Federated Premier and Calamos LongShort

Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the Calamos LongShort. In addition to that, Federated Premier is 1.05 times more volatile than Calamos LongShort Equity. It trades about -0.26 of its total potential returns per unit of risk. Calamos LongShort Equity is currently generating about 0.01 per unit of volatility. If you would invest  1,512  in Calamos LongShort Equity on September 24, 2024 and sell it today you would earn a total of  4.00  from holding Calamos LongShort Equity or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Federated Premier Municipal  vs.  Calamos LongShort Equity

Federated Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Calamos LongShort Equity

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Federated Premier and Calamos LongShort

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

The idea behind Federated Premier Municipal and Calamos LongShort Equity 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.