Correlation Between CATLIN GROUP and Baker Steel
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Baker Steel 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 Baker Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Baker Steel Resources, you can compare the effects of market volatilities on CATLIN GROUP and Baker Steel 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 Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Baker Steel.
Diversification Opportunities for CATLIN GROUP and Baker Steel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CATLIN and Baker is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources 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 Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Baker Steel go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Baker Steel
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 3.57 times less return on investment than Baker Steel. But when comparing it to its historical volatility, CATLIN GROUP is 3.0 times less risky than Baker Steel. It trades about 0.05 of its potential returns per unit of risk. Baker Steel Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,450 in Baker Steel Resources on September 14, 2024 and sell it today you would earn a total of 2,350 from holding Baker Steel Resources or generate 68.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Baker Steel Resources
Performance |
| Timeline |
| CATLIN GROUP |
| Baker Steel Resources |
CATLIN GROUP and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Baker Steel
The main advantage of trading using opposite CATLIN GROUP and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel'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 |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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