Correlation Between CATLIN GROUP and River
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and River 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 River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and River and Mercantile, you can compare the effects of market volatilities on CATLIN GROUP and River 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 River. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and River.
Diversification Opportunities for CATLIN GROUP and River
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CATLIN and River is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and River go up and down completely randomly.
Pair Corralation between CATLIN GROUP and River
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the River. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 4.87 times less risky than River. The stock trades about -0.21 of its potential returns per unit of risk. The River and Mercantile is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 17,950 in River and Mercantile on September 20, 2024 and sell it today you would lose (200.00) from holding River and Mercantile or give up 1.11% 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. River and Mercantile
Performance |
| Timeline |
| CATLIN GROUP |
| River and Mercantile |
CATLIN GROUP and River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and River
The main advantage of trading using opposite CATLIN GROUP and River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, River 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 River will offset losses from the drop in River's long position.| CATLIN GROUP vs. Flow Traders NV | CATLIN GROUP vs. Ebro Foods | CATLIN GROUP vs. McEwen Mining | CATLIN GROUP vs. Bisichi Mining PLC |
| River vs. Catalyst Media Group | River vs. CATLIN GROUP | River vs. Tamburi Investment Partners | River 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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