Correlation Between First Trust and Calamos Global

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

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

Diversification Opportunities for First Trust and Calamos Global

0.04

Correlation Coefficient

First Trust  Calamos Global

Significant diversification

The 3 months correlation between First and Calamos is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Calamos Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Global Total 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 Senior are associated (or correlated) with Calamos Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Global Total has no effect on the direction of First Trust i.e., First Trust and Calamos Global go up and down completely randomly.

Pair Corralation between First Trust and Calamos Global

Considering the 90-day investment horizon First Trust Senior is expected to generate 1.08 times more return on investment than Calamos Global. However, First Trust is 1.08 times more volatile than Calamos Global Total. It trades about 0.17 of its potential returns per unit of risk. Calamos Global Total is currently generating about 0.03 per unit of risk. If you would invest  1,028  in First Trust Senior on September 27, 2024 and sell it today you would earn a total of  27.00  from holding First Trust Senior or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

First Trust Senior  vs.  Calamos Global Total

First Trust Senior

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Senior are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Calamos Global Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calamos Global Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Calamos Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Trust and Calamos Global

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

The idea behind First Trust Senior and Calamos Global Total 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..