Correlation Between Catalyst Media and IMI PLC
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and IMI PLC 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 Catalyst Media and IMI PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Media Group and IMI PLC, you can compare the effects of market volatilities on Catalyst Media and IMI PLC 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 Catalyst Media with a short position of IMI PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and IMI PLC.
Diversification Opportunities for Catalyst Media and IMI PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catalyst and IMI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and IMI PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMI PLC and Catalyst Media 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 Catalyst Media Group are associated (or correlated) with IMI PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMI PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and IMI PLC go up and down completely randomly.
Pair Corralation between Catalyst Media and IMI PLC
Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the IMI PLC. In addition to that, Catalyst Media is 1.52 times more volatile than IMI PLC. It trades about -0.07 of its total potential returns per unit of risk. IMI PLC is currently generating about 0.05 per unit of volatility. If you would invest 172,459 in IMI PLC on December 2, 2024 and sell it today you would earn a total of 27,741 from holding IMI PLC or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. IMI PLC
Performance |
| Timeline |
| Catalyst Media Group |
| IMI PLC |
Catalyst Media and IMI PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and IMI PLC
The main advantage of trading using opposite Catalyst Media and IMI PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, IMI PLC 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 IMI PLC will offset losses from the drop in IMI PLC's long position.| Catalyst Media vs. Uber Technologies | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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