Correlation Between Apple and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Apple and Catalyst Metals 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 Apple and Catalyst Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Catalyst Metals Limited, you can compare the effects of market volatilities on Apple and Catalyst Metals 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 Apple with a short position of Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Catalyst Metals.
Diversification Opportunities for Apple and Catalyst Metals
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Catalyst is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Apple 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 Apple Inc are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Apple i.e., Apple and Catalyst Metals go up and down completely randomly.
Pair Corralation between Apple and Catalyst Metals
Given the investment horizon of 90 days Apple Inc is expected to generate 0.14 times more return on investment than Catalyst Metals. However, Apple Inc is 6.99 times less risky than Catalyst Metals. It trades about -0.06 of its potential returns per unit of risk. Catalyst Metals Limited is currently generating about -0.05 per unit of risk. If you would invest 23,314 in Apple Inc on August 27, 2024 and sell it today you would lose (327.00) from holding Apple Inc or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Catalyst Metals Limited
Performance |
| Timeline |
| Apple Inc |
| Catalyst Metals |
Apple and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Catalyst Metals
The main advantage of trading using opposite Apple and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Catalyst Metals 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.The idea behind Apple Inc and Catalyst Metals Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Catalyst Metals vs. Legacy Education | Catalyst Metals vs. NVIDIA | Catalyst Metals vs. Apple Inc | Catalyst Metals vs. Microsoft |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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