Correlation Between Catalyst Media and LBG Media
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Catalyst Media and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and LBG Media.
Diversification Opportunities for Catalyst Media and LBG Media
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Catalyst and LBG is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and LBG Media go up and down completely randomly.
Pair Corralation between Catalyst Media and LBG Media
Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 1.39 times less risky than LBG Media. The stock trades about -0.04 of its potential returns per unit of risk. The LBG Media PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,300 in LBG Media PLC on October 26, 2024 and sell it today you would earn a total of 800.00 from holding LBG Media PLC or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Catalyst Media Group vs. LBG Media PLC
Performance |
| Timeline |
| Catalyst Media Group |
| LBG Media PLC |
Catalyst Media and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and LBG Media
The main advantage of trading using opposite Catalyst Media and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Catalyst Media vs. New Residential Investment | Catalyst Media vs. Edinburgh Investment Trust | Catalyst Media vs. Systemair AB | Catalyst Media vs. Lindsell Train Investment |
| LBG Media vs. SMA Solar Technology | LBG Media vs. Telecom Italia SpA | LBG Media vs. Gamma Communications PLC | LBG Media vs. Cognizant Technology Solutions |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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