Correlation Between Transamerica Large and Calamos Dividend

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

By analyzing existing cross correlation between Transamerica Large Cap and Calamos Dividend Growth, you can compare the effects of market volatilities on Transamerica Large and Calamos Dividend 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 Transamerica Large with a short position of Calamos Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Calamos Dividend.

Diversification Opportunities for Transamerica Large and Calamos Dividend

0.93

Correlation Coefficient

Transamerica Large  Calamos Dividend

Almost no diversification

The 3 months correlation between Transamerica and Calamos is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Calamos Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Dividend Growth and Transamerica Large 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 Transamerica Large Cap are associated (or correlated) with Calamos Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Dividend Growth has no effect on the direction of Transamerica Large i.e., Transamerica Large and Calamos Dividend go up and down completely randomly.

Pair Corralation between Transamerica Large and Calamos Dividend

Assuming the 90 days horizon Transamerica Large is expected to generate 1.18 times less return on investment than Calamos Dividend. But when comparing it to its historical volatility, Transamerica Large Cap is 1.12 times less risky than Calamos Dividend. It trades about 0.1 of its potential returns per unit of risk. Calamos Dividend Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,260  in Calamos Dividend Growth on September 12, 2024 and sell it today you would earn a total of  604.00  from holding Calamos Dividend Growth or generate 47.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Transamerica Large Cap  vs.  Calamos Dividend Growth

Transamerica Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calamos Dividend Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calamos Dividend Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calamos Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transamerica Large and Calamos Dividend

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

The idea behind Transamerica Large Cap and Calamos Dividend Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.