Correlation Between Caldwell Partners and Dexterra

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

By analyzing existing cross correlation between Caldwell Partners International and Dexterra Group, you can compare the effects of market volatilities on Caldwell Partners and Dexterra 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 Caldwell Partners with a short position of Dexterra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Partners and Dexterra.

Diversification Opportunities for Caldwell Partners and Dexterra

0.7

Correlation Coefficient

Caldwell Partners  Dexterra

Poor diversification

The 3 months correlation between Caldwell and Dexterra is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Partners Internationa and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Caldwell Partners 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 Caldwell Partners International are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and Dexterra go up and down completely randomly.

Pair Corralation between Caldwell Partners and Dexterra

Assuming the 90 days trading horizon Caldwell Partners is expected to generate 1.79 times less return on investment than Dexterra. In addition to that, Caldwell Partners is 2.78 times more volatile than Dexterra Group. It trades about 0.06 of its total potential returns per unit of risk. Dexterra Group is currently generating about 0.29 per unit of volatility. If you would invest  632.00  in Dexterra Group on October 25, 2024 and sell it today you would earn a total of  152.00  from holding Dexterra Group or generate 24.05% return on investment over 90 days.

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

Caldwell Partners Internationa  vs.  Dexterra Group

Caldwell Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Partners International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Caldwell Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caldwell Partners and Dexterra

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

The idea behind Caldwell Partners International and Dexterra Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.