Correlation Between CATLIN GROUP and ACG Acquisition
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and ACG Acquisition 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 ACG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and ACG Acquisition Co, you can compare the effects of market volatilities on CATLIN GROUP and ACG Acquisition 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 ACG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and ACG Acquisition.
Diversification Opportunities for CATLIN GROUP and ACG Acquisition
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CATLIN and ACG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and ACG Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Acquisition 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 ACG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Acquisition has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and ACG Acquisition go up and down completely randomly.
Pair Corralation between CATLIN GROUP and ACG Acquisition
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 75.79 times less return on investment than ACG Acquisition. But when comparing it to its historical volatility, CATLIN GROUP is 51.34 times less risky than ACG Acquisition. It trades about 0.06 of its potential returns per unit of risk. ACG Acquisition Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 625.00 in ACG Acquisition Co on September 14, 2024 and sell it today you would lose (115.00) from holding ACG Acquisition Co or give up 18.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. ACG Acquisition Co
Performance |
| Timeline |
| CATLIN GROUP |
| ACG Acquisition |
CATLIN GROUP and ACG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and ACG Acquisition
The main advantage of trading using opposite CATLIN GROUP and ACG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, ACG Acquisition 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 ACG Acquisition will offset losses from the drop in ACG Acquisition's long position.| CATLIN GROUP vs. Alfa Financial Software | CATLIN GROUP vs. L3Harris Technologies | CATLIN GROUP vs. Cairo Communication SpA | CATLIN GROUP vs. Zoom Video Communications |
| ACG Acquisition vs. Catalyst Media Group | ACG Acquisition vs. CATLIN GROUP | ACG Acquisition vs. Tamburi Investment Partners | ACG Acquisition vs. Magnora ASA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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