Correlation Between Investment and CaliberCos

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

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

Diversification Opportunities for Investment and CaliberCos

-0.2

Correlation Coefficient

Investment  CaliberCos

Good diversification

The 3 months correlation between Investment and CaliberCos is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A and Investment 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 Investment AB Latour are associated (or correlated) with CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Investment i.e., Investment and CaliberCos go up and down completely randomly.

Pair Corralation between Investment and CaliberCos

Assuming the 90 days horizon Investment AB Latour is expected to under-perform the CaliberCos. But the otc stock apears to be less risky and, when comparing its historical volatility, Investment AB Latour is 10.82 times less risky than CaliberCos. The otc stock trades about -0.16 of its potential returns per unit of risk. The CaliberCos Class A is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  68.00  in CaliberCos Class A on October 25, 2024 and sell it today you would lose (7.21) from holding CaliberCos Class A or give up 10.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Investment AB Latour  vs.  CaliberCos Class A

Investment AB Latour

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment AB Latour has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CaliberCos Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaliberCos Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CaliberCos is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Investment and CaliberCos

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

The idea behind Investment AB Latour and CaliberCos Class A 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.