Correlation Between Catalyst Media and Pearson PLC
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Pearson 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 Pearson 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 Pearson PLC, you can compare the effects of market volatilities on Catalyst Media and Pearson 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 Pearson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Pearson PLC.
Diversification Opportunities for Catalyst Media and Pearson PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catalyst and Pearson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Pearson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson 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 Pearson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and Pearson PLC go up and down completely randomly.
Pair Corralation between Catalyst Media and Pearson PLC
Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the Pearson PLC. In addition to that, Catalyst Media is 1.8 times more volatile than Pearson PLC. It trades about 0.0 of its total potential returns per unit of risk. Pearson PLC is currently generating about 0.12 per unit of volatility. If you would invest 87,718 in Pearson PLC on September 4, 2024 and sell it today you would earn a total of 36,532 from holding Pearson PLC or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Catalyst Media Group vs. Pearson PLC
Performance |
| Timeline |
| Catalyst Media Group |
| Pearson PLC |
Catalyst Media and Pearson PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Pearson PLC
The main advantage of trading using opposite Catalyst Media and Pearson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, Pearson 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 Pearson PLC will offset losses from the drop in Pearson PLC's long position.| Catalyst Media vs. STMicroelectronics NV | Catalyst Media vs. TR Property Investment | Catalyst Media vs. Monks Investment Trust | Catalyst Media vs. Smithson Investment Trust |
| Pearson PLC vs. Quadrise Plc | Pearson PLC vs. ImmuPharma PLC | Pearson PLC vs. Intuitive Investments Group | Pearson PLC vs. European Metals Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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