Correlation Between Vanguard Financials and Calamos Global

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

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

Diversification Opportunities for Vanguard Financials and Calamos Global

0.73

Correlation Coefficient

Vanguard Financials  Calamos Global

Poor diversification

The 3 months correlation between Vanguard and Calamos is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Calamos Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Global Growth and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Calamos Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Global Growth has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Calamos Global go up and down completely randomly.

Pair Corralation between Vanguard Financials and Calamos Global

Assuming the 90 days horizon Vanguard Financials Index is expected to generate 2.2 times more return on investment than Calamos Global. However, Vanguard Financials is 2.2 times more volatile than Calamos Global Growth. It trades about 0.19 of its potential returns per unit of risk. Calamos Global Growth is currently generating about 0.15 per unit of risk. If you would invest  5,386  in Vanguard Financials Index on September 13, 2024 and sell it today you would earn a total of  764.00  from holding Vanguard Financials Index or generate 14.18% return on investment over 90 days.

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

Vanguard Financials Index  vs.  Calamos Global Growth

Vanguard Financials Index

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Financials showed solid returns over the last few months and may actually be approaching a breakup point.

Calamos Global Growth

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Vanguard Financials and Calamos Global

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

The idea behind Vanguard Financials Index and Calamos Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.