Correlation Between CATLIN GROUP and BH Macro
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and BH Macro 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 BH Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and BH Macro Limited, you can compare the effects of market volatilities on CATLIN GROUP and BH Macro 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 BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and BH Macro.
Diversification Opportunities for CATLIN GROUP and BH Macro
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CATLIN and BHMG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited 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 BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and BH Macro go up and down completely randomly.
Pair Corralation between CATLIN GROUP and BH Macro
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.36 times more return on investment than BH Macro. However, CATLIN GROUP is 1.36 times more volatile than BH Macro Limited. It trades about 0.04 of its potential returns per unit of risk. BH Macro Limited is currently generating about -0.02 per unit of risk. If you would invest 7,200 in CATLIN GROUP on August 29, 2024 and sell it today you would earn a total of 2,300 from holding CATLIN GROUP or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
CATLIN GROUP vs. BH Macro Limited
Performance |
| Timeline |
| CATLIN GROUP |
| BH Macro Limited |
CATLIN GROUP and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and BH Macro
The main advantage of trading using opposite CATLIN GROUP and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, BH Macro 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 BH Macro will offset losses from the drop in BH Macro's long position.| CATLIN GROUP vs. Europa Metals | CATLIN GROUP vs. BW Offshore | CATLIN GROUP vs. Solstad Offshore ASA | CATLIN GROUP vs. Wheaton Precious Metals |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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