Correlation Between Nuveen California and Calamos LongShort

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

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

Diversification Opportunities for Nuveen California and Calamos LongShort

-0.07

Correlation Coefficient

Nuveen California  Calamos LongShort

Good diversification

The 3 months correlation between Nuveen and Calamos is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select 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 Nuveen California 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 Nuveen California Select 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 Nuveen California i.e., Nuveen California and Calamos LongShort go up and down completely randomly.

Pair Corralation between Nuveen California and Calamos LongShort

Considering the 90-day investment horizon Nuveen California Select is expected to under-perform the Calamos LongShort. But the stock apears to be less risky and, when comparing its historical volatility, Nuveen California Select is 1.02 times less risky than Calamos LongShort. The stock trades about -0.13 of its potential returns per unit of risk. The Calamos LongShort Equity is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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	100.0%
Values	Daily Returns

Nuveen California Select  vs.  Calamos LongShort Equity

Nuveen California Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Nuveen California and Calamos LongShort

The main advantage of trading using opposite Nuveen California and Calamos LongShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California 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 Nuveen California Select 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.