Correlation Between Catena Media and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Catena Media and Balfour Beatty 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 Catena Media and Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media PLC and Balfour Beatty plc, you can compare the effects of market volatilities on Catena Media and Balfour Beatty 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 Catena Media with a short position of Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Balfour Beatty.
Diversification Opportunities for Catena Media and Balfour Beatty
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catena and Balfour is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty plc and Catena Media 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 Catena Media PLC are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of Catena Media i.e., Catena Media and Balfour Beatty go up and down completely randomly.
Pair Corralation between Catena Media and Balfour Beatty
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Balfour Beatty. In addition to that, Catena Media is 3.47 times more volatile than Balfour Beatty plc. It trades about -0.06 of its total potential returns per unit of risk. Balfour Beatty plc is currently generating about 0.11 per unit of volatility. If you would invest 31,726 in Balfour Beatty plc on September 15, 2024 and sell it today you would earn a total of 13,974 from holding Balfour Beatty plc or generate 44.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Catena Media PLC vs. Balfour Beatty plc
Performance |
| Timeline |
| Catena Media PLC |
| Balfour Beatty plc |
Catena Media and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Balfour Beatty
The main advantage of trading using opposite Catena Media and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| Catena Media vs. CAP LEASE AVIATION | Catena Media vs. Blackstone Loan Financing | Catena Media vs. Systemair AB | Catena Media vs. Ryanair Holdings plc |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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