Correlation Between CaliberCos and Royce Global

Can any of the company-specific risk be diversified away by investing in both CaliberCos and Royce 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 CaliberCos and Royce Global 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 Royce Global Value, you can compare the effects of market volatilities on CaliberCos and Royce 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 CaliberCos with a short position of Royce Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CaliberCos and Royce Global.

Diversification Opportunities for CaliberCos and Royce Global

-0.25

Correlation Coefficient

CaliberCos  Royce Global

Very good diversification

The 3 months correlation between CaliberCos and Royce is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CaliberCos Class A and Royce Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Global Value 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 Royce Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Global Value has no effect on the direction of CaliberCos i.e., CaliberCos and Royce Global go up and down completely randomly.

Pair Corralation between CaliberCos and Royce Global

Considering the 90-day investment horizon CaliberCos Class A is expected to generate 5.96 times more return on investment than Royce Global. However, CaliberCos is 5.96 times more volatile than Royce Global Value. It trades about 0.09 of its potential returns per unit of risk. Royce Global Value is currently generating about -0.03 per unit of risk. If you would invest  53.00  in CaliberCos Class A on December 21, 2024 and sell it today you would earn a total of  12.00  from holding CaliberCos Class A or generate 22.64% 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.  Royce Global Value

CaliberCos Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CaliberCos Class A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CaliberCos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Royce Global Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Global Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Royce Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CaliberCos and Royce Global

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

The idea behind CaliberCos Class A and Royce Global Value 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.