Correlation Between CATLIN GROUP and Global Net
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Global Net 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 CATLIN GROUP and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Global Net Lease, you can compare the effects of market volatilities on CATLIN GROUP and Global Net 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 CATLIN GROUP with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Global Net.
Diversification Opportunities for CATLIN GROUP and Global Net
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CATLIN and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Global Net go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Global Net
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 0.16 times more return on investment than Global Net. However, CATLIN GROUP is 6.06 times less risky than Global Net. It trades about -0.14 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.13 per unit of risk. If you would invest 9,475 in CATLIN GROUP on September 4, 2024 and sell it today you would lose (75.00) from holding CATLIN GROUP or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
CATLIN GROUP vs. Global Net Lease
Performance |
| Timeline |
| CATLIN GROUP |
| Global Net Lease |
CATLIN GROUP and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Global Net
The main advantage of trading using opposite CATLIN GROUP and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| CATLIN GROUP vs. Tungsten West PLC | CATLIN GROUP vs. Versarien PLC | CATLIN GROUP vs. Quantum Blockchain Technologies | CATLIN GROUP vs. Malvern International |
| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Hyundai Motor | Global Net vs. Toyota Motor Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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