Correlation Between Catena Media and Mitie Group
Can any of the company-specific risk be diversified away by investing in both Catena Media and Mitie Group 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 Mitie Group 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 Mitie Group PLC, you can compare the effects of market volatilities on Catena Media and Mitie Group 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 Mitie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Mitie Group.
Diversification Opportunities for Catena Media and Mitie Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catena and Mitie is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of Catena Media i.e., Catena Media and Mitie Group go up and down completely randomly.
Pair Corralation between Catena Media and Mitie Group
Assuming the 90 days trading horizon Catena Media PLC is expected to generate 3.86 times more return on investment than Mitie Group. However, Catena Media is 3.86 times more volatile than Mitie Group PLC. It trades about 0.07 of its potential returns per unit of risk. Mitie Group PLC is currently generating about -0.05 per unit of risk. If you would invest 437.00 in Catena Media PLC on September 14, 2024 and sell it today you would earn a total of 27.00 from holding Catena Media PLC or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media PLC vs. Mitie Group PLC
Performance |
| Timeline |
| Catena Media PLC |
| Mitie Group PLC |
Catena Media and Mitie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Mitie Group
The main advantage of trading using opposite Catena Media and Mitie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Mitie Group 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 Mitie Group will offset losses from the drop in Mitie Group's long position.| Catena Media vs. Regions Financial Corp | Catena Media vs. Broadridge Financial Solutions | Catena Media vs. Sydbank | Catena Media vs. Southwest Airlines Co |
| Mitie Group vs. Centaur Media | Mitie Group vs. AcadeMedia AB | Mitie Group vs. Prosiebensat 1 Media | Mitie Group vs. Catena Media PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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