Correlation Between First Trust and Calamos Laddered

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

By analyzing existing cross correlation between First Trust Cboe and Calamos Laddered SP, you can compare the effects of market volatilities on First Trust and Calamos Laddered 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 First Trust with a short position of Calamos Laddered. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Calamos Laddered.

Diversification Opportunities for First Trust and Calamos Laddered

0.98

Correlation Coefficient

First Trust  Calamos Laddered

Almost no diversification

The 3 months correlation between First and Calamos is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Cboe and Calamos Laddered SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Laddered and First Trust 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 First Trust Cboe are associated (or correlated) with Calamos Laddered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Laddered has no effect on the direction of First Trust i.e., First Trust and Calamos Laddered go up and down completely randomly.

Pair Corralation between First Trust and Calamos Laddered

Given the investment horizon of 90 days First Trust Cboe is expected to generate 2.33 times more return on investment than Calamos Laddered. However, First Trust is 2.33 times more volatile than Calamos Laddered SP. It trades about 0.25 of its potential returns per unit of risk. Calamos Laddered SP is currently generating about 0.33 per unit of risk. If you would invest  3,041  in First Trust Cboe on September 15, 2024 and sell it today you would earn a total of  31.00  from holding First Trust Cboe or generate 1.02% return on investment over 90 days.

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

First Trust Cboe  vs.  Calamos Laddered SP

First Trust Cboe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Cboe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Calamos Laddered

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calamos Laddered SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Calamos Laddered is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Trust and Calamos Laddered

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

The idea behind First Trust Cboe and Calamos Laddered SP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..