Correlation Between California Bond and Calamos Dividend

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

By analyzing existing cross correlation between California Bond Fund and Calamos Dividend Growth, you can compare the effects of market volatilities on California Bond and Calamos Dividend 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 California Bond with a short position of Calamos Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Calamos Dividend.

Diversification Opportunities for California Bond and Calamos Dividend

0.2

Correlation Coefficient

California Bond  Calamos Dividend

Modest diversification

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

Pair Corralation between California Bond and Calamos Dividend

Assuming the 90 days horizon California Bond is expected to generate 62.79 times less return on investment than Calamos Dividend. But when comparing it to its historical volatility, California Bond Fund is 2.34 times less risky than Calamos Dividend. It trades about 0.01 of its potential returns per unit of risk. Calamos Dividend Growth is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,736  in Calamos Dividend Growth on September 14, 2024 and sell it today you would earn a total of  135.00  from holding Calamos Dividend Growth or generate 7.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

California Bond Fund  vs.  Calamos Dividend Growth

California Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, California Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calamos Dividend Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calamos Dividend Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Calamos Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with California Bond and Calamos Dividend

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

The idea behind California Bond Fund and Calamos Dividend Growth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.