Correlation Between Catena Media and Power Metal
Can any of the company-specific risk be diversified away by investing in both Catena Media and Power Metal 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 Power Metal 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 Power Metal Resources, you can compare the effects of market volatilities on Catena Media and Power Metal 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 Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Power Metal.
Diversification Opportunities for Catena Media and Power Metal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catena and Power is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Catena Media i.e., Catena Media and Power Metal go up and down completely randomly.
Pair Corralation between Catena Media and Power Metal
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Power Metal. In addition to that, Catena Media is 1.27 times more volatile than Power Metal Resources. It trades about -0.03 of its total potential returns per unit of risk. Power Metal Resources is currently generating about -0.04 per unit of volatility. If you would invest 1,900 in Power Metal Resources on September 1, 2024 and sell it today you would lose (437.00) from holding Power Metal Resources or give up 23.0% 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. Power Metal Resources
Performance |
| Timeline |
| Catena Media PLC |
| Power Metal Resources |
Catena Media and Power Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Power Metal
The main advantage of trading using opposite Catena Media and Power Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Power Metal 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 Power Metal will offset losses from the drop in Power Metal's long position.| Catena Media vs. Uniper SE | Catena Media vs. Mulberry Group PLC | Catena Media vs. London Security Plc | Catena Media vs. Triad Group PLC |
| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Centamin PLC | Power Metal vs. Atalaya Mining |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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