Correlation Between CATLIN GROUP and Oakley Capital
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Oakley Capital 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 Oakley Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Oakley Capital Investments, you can compare the effects of market volatilities on CATLIN GROUP and Oakley Capital 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 Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Oakley Capital.
Diversification Opportunities for CATLIN GROUP and Oakley Capital
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between CATLIN and Oakley is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Oakley Capital go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Oakley Capital
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Oakley Capital. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 1.99 times less risky than Oakley Capital. The stock trades about -0.21 of its potential returns per unit of risk. The Oakley Capital Investments is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 49,900 in Oakley Capital Investments on October 24, 2024 and sell it today you would lose (400.00) from holding Oakley Capital Investments or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Oakley Capital Investments
Performance |
| Timeline |
| CATLIN GROUP |
| Oakley Capital Inves |
CATLIN GROUP and Oakley Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Oakley Capital
The main advantage of trading using opposite CATLIN GROUP and Oakley Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Oakley Capital 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 Oakley Capital will offset losses from the drop in Oakley Capital's long position.| CATLIN GROUP vs. Supermarket Income REIT | CATLIN GROUP vs. Sealed Air Corp | CATLIN GROUP vs. Ebro Foods | CATLIN GROUP vs. Fair Oaks Income |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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