Correlation Between Morningstar Aggressive and Catalyst Hedged
Can any of the company-specific risk be diversified away by investing in both Morningstar Aggressive and Catalyst Hedged 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 Morningstar Aggressive and Catalyst Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morningstar Aggressive Growth and Catalyst Hedged Modity, you can compare the effects of market volatilities on Morningstar Aggressive and Catalyst Hedged 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 Morningstar Aggressive with a short position of Catalyst Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Aggressive and Catalyst Hedged.
Diversification Opportunities for Morningstar Aggressive and Catalyst Hedged
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morningstar and Catalyst is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Aggressive Growth and Catalyst Hedged Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Hedged Modity and Morningstar Aggressive 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 Morningstar Aggressive Growth are associated (or correlated) with Catalyst Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Hedged Modity has no effect on the direction of Morningstar Aggressive i.e., Morningstar Aggressive and Catalyst Hedged go up and down completely randomly.
Pair Corralation between Morningstar Aggressive and Catalyst Hedged
Assuming the 90 days horizon Morningstar Aggressive Growth is expected to generate 0.82 times more return on investment than Catalyst Hedged. However, Morningstar Aggressive Growth is 1.22 times less risky than Catalyst Hedged. It trades about 0.09 of its potential returns per unit of risk. Catalyst Hedged Modity is currently generating about -0.04 per unit of risk. If you would invest 1,490 in Morningstar Aggressive Growth on August 26, 2024 and sell it today you would earn a total of 125.00 from holding Morningstar Aggressive Growth or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morningstar Aggressive Growth vs. Catalyst Hedged Modity
Performance |
| Timeline |
| Morningstar Aggressive |
| Catalyst Hedged Modity |
Morningstar Aggressive and Catalyst Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morningstar Aggressive and Catalyst Hedged
The main advantage of trading using opposite Morningstar Aggressive and Catalyst Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Aggressive position performs unexpectedly, Catalyst Hedged 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 Hedged will offset losses from the drop in Catalyst Hedged's long position.| Morningstar Aggressive vs. Ep Emerging Markets | Morningstar Aggressive vs. Extended Market Index | Morningstar Aggressive vs. Rbc Emerging Markets | Morningstar Aggressive vs. Western Asset Diversified |
| Catalyst Hedged vs. Pace High Yield | Catalyst Hedged vs. Pace High Yield | Catalyst Hedged vs. Morningstar Aggressive Growth | Catalyst Hedged vs. Artisan High Income |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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