Correlation Between CATLIN GROUP and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Falcon Oil 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 Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Falcon Oil Gas, you can compare the effects of market volatilities on CATLIN GROUP and Falcon Oil 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 Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Falcon Oil.
Diversification Opportunities for CATLIN GROUP and Falcon Oil
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CATLIN and Falcon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas 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 Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Falcon Oil go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Falcon Oil
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Falcon Oil. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 9.67 times less risky than Falcon Oil. The stock trades about -0.25 of its potential returns per unit of risk. The Falcon Oil Gas is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 425.00 in Falcon Oil Gas on October 26, 2024 and sell it today you would earn a total of 325.00 from holding Falcon Oil Gas or generate 76.47% 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. Falcon Oil Gas
Performance |
| Timeline |
| CATLIN GROUP |
| Falcon Oil Gas |
CATLIN GROUP and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Falcon Oil
The main advantage of trading using opposite CATLIN GROUP and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Falcon Oil 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| CATLIN GROUP vs. Spirent Communications plc | CATLIN GROUP vs. Westlake Chemical Corp | CATLIN GROUP vs. Cairo Communication SpA | CATLIN GROUP vs. Gamma Communications PLC |
| Falcon Oil vs. Take Two Interactive Software | Falcon Oil vs. Tatton Asset Management | Falcon Oil vs. Coor Service Management | Falcon Oil vs. Accesso Technology Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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