Correlation Between Cal Bay and OFX Group

Can any of the company-specific risk be diversified away by investing in both Cal Bay and OFX Group 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 Cal Bay and OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cal Bay Intl and OFX Group Ltd, you can compare the effects of market volatilities on Cal Bay and OFX Group 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 Cal Bay with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Bay and OFX Group.

Diversification Opportunities for Cal Bay and OFX Group

0.0

Correlation Coefficient

Cal Bay  OFX Group

Pay attention - limited upside

The 3 months correlation between Cal and OFX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cal Bay Intl and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and Cal Bay 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 Cal Bay Intl are associated (or correlated) with OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Cal Bay i.e., Cal Bay and OFX Group go up and down completely randomly.

Pair Corralation between Cal Bay and OFX Group

Given the investment horizon of 90 days Cal Bay Intl is expected to under-perform the OFX Group. In addition to that, Cal Bay is 1.27 times more volatile than OFX Group Ltd. It trades about -0.13 of its total potential returns per unit of risk. OFX Group Ltd is currently generating about 0.04 per unit of volatility. If you would invest  440.00  in OFX Group Ltd on September 12, 2024 and sell it today you would lose (5.00) from holding OFX Group Ltd or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cal Bay Intl  vs.  OFX Group Ltd

Cal Bay Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cal Bay Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cal Bay and OFX Group

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

The idea behind Cal Bay Intl and OFX Group Ltd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.