Correlation Between Catena Media and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Catena Media and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Catena Media and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and XLMedia PLC.
Diversification Opportunities for Catena Media and XLMedia PLC
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Catena and XLMedia is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Catena Media i.e., Catena Media and XLMedia PLC go up and down completely randomly.
Pair Corralation between Catena Media and XLMedia PLC
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the XLMedia PLC. But the stock apears to be less risky and, when comparing its historical volatility, Catena Media PLC is 1.13 times less risky than XLMedia PLC. The stock trades about -0.27 of its potential returns per unit of risk. The XLMedia PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in XLMedia PLC on August 30, 2024 and sell it today you would earn a total of 185.00 from holding XLMedia PLC or generate 18.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media PLC vs. XLMedia PLC
Performance |
| Timeline |
| Catena Media PLC |
| XLMedia PLC |
Catena Media and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and XLMedia PLC
The main advantage of trading using opposite Catena Media and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Catena Media vs. Lendinvest PLC | Catena Media vs. Neometals | Catena Media vs. Albion Technology General | Catena Media vs. Jupiter Fund Management |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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