Correlation Between CATLIN GROUP and Tungsten West
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Tungsten West 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 Tungsten West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Tungsten West PLC, you can compare the effects of market volatilities on CATLIN GROUP and Tungsten West 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 Tungsten West. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Tungsten West.
Diversification Opportunities for CATLIN GROUP and Tungsten West
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CATLIN and Tungsten is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Tungsten West PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tungsten West PLC 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 Tungsten West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tungsten West PLC has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Tungsten West go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Tungsten West
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Tungsten West. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 30.78 times less risky than Tungsten West. The stock trades about -0.14 of its potential returns per unit of risk. The Tungsten West PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 275.00 in Tungsten West PLC on September 2, 2024 and sell it today you would earn a total of 25.00 from holding Tungsten West PLC or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Tungsten West PLC
Performance |
| Timeline |
| CATLIN GROUP |
| Tungsten West PLC |
CATLIN GROUP and Tungsten West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Tungsten West
The main advantage of trading using opposite CATLIN GROUP and Tungsten West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Tungsten West 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 Tungsten West will offset losses from the drop in Tungsten West's long position.| CATLIN GROUP vs. Zegona Communications Plc | CATLIN GROUP vs. Cairo Communication SpA | CATLIN GROUP vs. Teradata Corp | CATLIN GROUP vs. Aeorema Communications Plc |
| Tungsten West vs. Verizon Communications | Tungsten West vs. Fortune Brands Home | Tungsten West vs. Infrastrutture Wireless Italiane | Tungsten West vs. Home Depot |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |