Correlation Between Select Fund and Catalyst Dynamic
Can any of the company-specific risk be diversified away by investing in both Select Fund and Catalyst Dynamic 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 Select Fund and Catalyst Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund C and Catalyst Dynamic Alpha, you can compare the effects of market volatilities on Select Fund and Catalyst Dynamic 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 Select Fund with a short position of Catalyst Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Catalyst Dynamic.
Diversification Opportunities for Select Fund and Catalyst Dynamic
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Catalyst is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund C and Catalyst Dynamic Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Dynamic Alpha and Select Fund 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 Select Fund C are associated (or correlated) with Catalyst Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Dynamic Alpha has no effect on the direction of Select Fund i.e., Select Fund and Catalyst Dynamic go up and down completely randomly.
Pair Corralation between Select Fund and Catalyst Dynamic
Assuming the 90 days horizon Select Fund is expected to generate 1.28 times less return on investment than Catalyst Dynamic. But when comparing it to its historical volatility, Select Fund C is 1.01 times less risky than Catalyst Dynamic. It trades about 0.27 of its potential returns per unit of risk. Catalyst Dynamic Alpha is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,481 in Catalyst Dynamic Alpha on September 1, 2024 and sell it today you would earn a total of 179.00 from holding Catalyst Dynamic Alpha or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Select Fund C vs. Catalyst Dynamic Alpha
Performance |
| Timeline |
| Select Fund C |
| Catalyst Dynamic Alpha |
Select Fund and Catalyst Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Catalyst Dynamic
The main advantage of trading using opposite Select Fund and Catalyst Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Catalyst Dynamic 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 Dynamic will offset losses from the drop in Catalyst Dynamic's long position.| Select Fund vs. Growth Fund Investor | Select Fund vs. Ultra Fund Investor | Select Fund vs. Heritage Fund Investor | Select Fund vs. International Growth Fund |
| Catalyst Dynamic vs. Catalystmillburn Hedge Strategy | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Catalyst Mlp Infrastructure |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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