Correlation Between CATLIN GROUP and Neometals
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Neometals 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 Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Neometals, you can compare the effects of market volatilities on CATLIN GROUP and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Neometals.
Diversification Opportunities for CATLIN GROUP and Neometals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between CATLIN and Neometals is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Neometals go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Neometals
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 0.35 times more return on investment than Neometals. However, CATLIN GROUP is 2.85 times less risky than Neometals. It trades about 0.05 of its potential returns per unit of risk. Neometals is currently generating about -0.08 per unit of risk. If you would invest 7,450 in CATLIN GROUP on August 26, 2024 and sell it today you would earn a total of 2,050 from holding CATLIN GROUP or generate 27.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Neometals
Performance |
| Timeline |
| CATLIN GROUP |
| Neometals |
CATLIN GROUP and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Neometals
The main advantage of trading using opposite CATLIN GROUP and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| CATLIN GROUP vs. Neometals | CATLIN GROUP vs. Ebro Foods | CATLIN GROUP vs. Endeavour Mining Corp | CATLIN GROUP vs. BW Offshore |
| Neometals vs. Fevertree Drinks Plc | Neometals vs. National Beverage Corp | Neometals vs. Baker Steel Resources | Neometals vs. Ironveld Plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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