Correlation Between One World and Caldwell Partners

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

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

Diversification Opportunities for One World and Caldwell Partners

-0.11

Correlation Coefficient

One World  Caldwell Partners

Good diversification

The 3 months correlation between One and Caldwell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding One World Universe and The Caldwell Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners and One World 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 One World Universe are associated (or correlated) with Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of One World i.e., One World and Caldwell Partners go up and down completely randomly.

Pair Corralation between One World and Caldwell Partners

Given the investment horizon of 90 days One World Universe is expected to generate 2.29 times more return on investment than Caldwell Partners. However, One World is 2.29 times more volatile than The Caldwell Partners. It trades about 0.01 of its potential returns per unit of risk. The Caldwell Partners is currently generating about -0.1 per unit of risk. If you would invest  0.74  in One World Universe on December 28, 2024 and sell it today you would lose (0.13) from holding One World Universe or give up 17.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

One World Universe  vs.  The Caldwell Partners

One World Universe

Risk-Adjusted Performance

Weak

Over the last 90 days One World Universe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, One World is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with One World and Caldwell Partners

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

The idea behind One World Universe and The Caldwell Partners 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.