Correlation Between CATLIN GROUP and Herald Investment
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Herald Investment 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 Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Herald Investment Trust, you can compare the effects of market volatilities on CATLIN GROUP and Herald Investment 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 Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Herald Investment.
Diversification Opportunities for CATLIN GROUP and Herald Investment
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CATLIN and Herald is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Herald Investment go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Herald Investment
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 0.37 times more return on investment than Herald Investment. However, CATLIN GROUP is 2.72 times less risky than Herald Investment. It trades about -0.21 of its potential returns per unit of risk. Herald Investment Trust is currently generating about -0.13 per unit of risk. If you would invest 9,400 in CATLIN GROUP on October 23, 2024 and sell it today you would lose (200.00) from holding CATLIN GROUP or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
CATLIN GROUP vs. Herald Investment Trust
Performance |
| Timeline |
| CATLIN GROUP |
| Herald Investment Trust |
CATLIN GROUP and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Herald Investment
The main advantage of trading using opposite CATLIN GROUP and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| CATLIN GROUP vs. GreenX Metals | CATLIN GROUP vs. Nordic Semiconductor ASA | CATLIN GROUP vs. Eastinco Mining Exploration | CATLIN GROUP vs. Elmos Semiconductor SE |
| Herald Investment vs. Catalyst Media Group | Herald Investment vs. CATLIN GROUP | Herald Investment vs. Tamburi Investment Partners | Herald Investment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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