Correlation Between Catalyst Media and Next PLC
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Next 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 Next 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 Next PLC, you can compare the effects of market volatilities on Catalyst Media and Next 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 Next PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Next PLC.
Diversification Opportunities for Catalyst Media and Next PLC
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalyst and Next is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Next PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next 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 Next PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and Next PLC go up and down completely randomly.
Pair Corralation between Catalyst Media and Next PLC
Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 1.72 times more return on investment than Next PLC. However, Catalyst Media is 1.72 times more volatile than Next PLC. It trades about 0.04 of its potential returns per unit of risk. Next PLC is currently generating about -0.03 per unit of risk. If you would invest 9,500 in Catalyst Media Group on August 25, 2024 and sell it today you would earn a total of 150.00 from holding Catalyst Media Group or generate 1.58% 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. Next PLC
Performance |
| Timeline |
| Catalyst Media Group |
| Next PLC |
Catalyst Media and Next PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Next PLC
The main advantage of trading using opposite Catalyst Media and Next PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, Next 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 Next PLC will offset losses from the drop in Next PLC's long position.| Catalyst Media vs. Toyota Motor Corp | Catalyst Media vs. SoftBank Group Corp | Catalyst Media vs. Fannie Mae | Catalyst Media vs. Panasonic Corp |
| Next PLC vs. Aeorema Communications Plc | Next PLC vs. Games Workshop Group | Next PLC vs. Gamma Communications PLC | Next PLC vs. Zoom Video Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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