Correlation Between Templeton Dragon and Calamos Dynamic

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

By analyzing existing cross correlation between Templeton Dragon Closed and Calamos Dynamic Convertible, you can compare the effects of market volatilities on Templeton Dragon and Calamos Dynamic 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 Templeton Dragon with a short position of Calamos Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Dragon and Calamos Dynamic.

Diversification Opportunities for Templeton Dragon and Calamos Dynamic

0.18

Correlation Coefficient

Templeton Dragon  Calamos Dynamic

Average diversification

The 3 months correlation between Templeton and Calamos is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Dragon Closed and Calamos Dynamic Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Dynamic Conv and Templeton Dragon 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 Templeton Dragon Closed are associated (or correlated) with Calamos Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Dynamic Conv has no effect on the direction of Templeton Dragon i.e., Templeton Dragon and Calamos Dynamic go up and down completely randomly.

Pair Corralation between Templeton Dragon and Calamos Dynamic

Considering the 90-day investment horizon Templeton Dragon Closed is expected to generate 1.75 times more return on investment than Calamos Dynamic. However, Templeton Dragon is 1.75 times more volatile than Calamos Dynamic Convertible. It trades about 0.15 of its potential returns per unit of risk. Calamos Dynamic Convertible is currently generating about -0.02 per unit of risk. If you would invest  852.00  in Templeton Dragon Closed on November 28, 2024 and sell it today you would earn a total of  115.00  from holding Templeton Dragon Closed or generate 13.5% return on investment over 90 days.

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

Templeton Dragon Closed  vs.  Calamos Dynamic Convertible

Templeton Dragon Closed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Dragon Closed are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Templeton Dragon reported solid returns over the last few months and may actually be approaching a breakup point.

Calamos Dynamic Conv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calamos Dynamic Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, Calamos Dynamic is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Templeton Dragon and Calamos Dynamic

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

The idea behind Templeton Dragon Closed and Calamos Dynamic Convertible 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.