Correlation Between CaliberCos and OFS Credit

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

By analyzing existing cross correlation between CaliberCos Class A and OFS Credit, you can compare the effects of market volatilities on CaliberCos and OFS Credit 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 CaliberCos with a short position of OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of CaliberCos and OFS Credit.

Diversification Opportunities for CaliberCos and OFS Credit

-0.27

Correlation Coefficient

CaliberCos  OFS Credit

Very good diversification

The 3 months correlation between CaliberCos and OFS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CaliberCos Class A and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit and CaliberCos 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 CaliberCos Class A are associated (or correlated) with OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of CaliberCos i.e., CaliberCos and OFS Credit go up and down completely randomly.

Pair Corralation between CaliberCos and OFS Credit

Considering the 90-day investment horizon CaliberCos Class A is expected to generate 13.81 times more return on investment than OFS Credit. However, CaliberCos is 13.81 times more volatile than OFS Credit. It trades about 0.09 of its potential returns per unit of risk. OFS Credit is currently generating about -0.01 per unit of risk. If you would invest  60.00  in CaliberCos Class A on October 6, 2024 and sell it today you would earn a total of  10.00  from holding CaliberCos Class A or generate 16.67% return on investment over 90 days.

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

CaliberCos Class A  vs.  OFS Credit

CaliberCos Class A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CaliberCos Class A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CaliberCos exhibited solid returns over the last few months and may actually be approaching a breakup point.

OFS Credit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OFS Credit is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CaliberCos and OFS Credit

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

The idea behind CaliberCos Class A and OFS Credit 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.