Correlation Between Catena Media and Investment
Can any of the company-specific risk be diversified away by investing in both Catena Media and Investment 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 Investment 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 The Investment, you can compare the effects of market volatilities on Catena Media and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Investment.
Diversification Opportunities for Catena Media and Investment
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catena and Investment is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of Catena Media i.e., Catena Media and Investment go up and down completely randomly.
Pair Corralation between Catena Media and Investment
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Investment. In addition to that, Catena Media is 8.38 times more volatile than The Investment. It trades about -0.1 of its total potential returns per unit of risk. The Investment is currently generating about -0.05 per unit of volatility. If you would invest 36,600 in The Investment on December 4, 2024 and sell it today you would lose (1,500) from holding The Investment or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media PLC vs. The Investment
Performance |
| Timeline |
| Catena Media PLC |
| Investment |
Catena Media and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Investment
The main advantage of trading using opposite Catena Media and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Catena Media vs. Solstad Offshore ASA | Catena Media vs. CNH Industrial NV | Catena Media vs. Batm Advanced Communications | Catena Media vs. United Internet AG |
| Investment vs. Infrastrutture Wireless Italiane | Investment vs. Kinnevik Investment AB | Investment vs. Beeks Trading | Investment vs. Jade Road Investments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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